FCA Urges Electronic Signature Acceptance

The Financial Conduct Authority (FCA) published a statement today 20^th April 2020 outlining its expectations of firms that require wet-ink signatures (this is where a document is signed by hand using a pen) during the Covid-19 restrictions.

The FCA has agreed its rules do not require wet-ink signatures in agreements and they do not stop firms from using electronic signatures. 

The FCA said: “They cannot give legal advice and firms should check the legal position themselves and the validity of electronic signatures”.

Firms are asked to check the FCA handbook Principles for Businesses and consider the related requirements and general rules. For example:

• Firms should consider the best interest for the client rule, the fair and not misleading rule to make sure when a client signs a document electronically it does not make it more difficult for them to understand what they are agreeing to.
• Firms should consider principals 2, 3 and 6 and check any risks or harm if using electronic signatures and take the necessary steps to minimize them.

The FCA recently stated that they would accept electronic signatures from firms including fund-related applications and applications from mutual societies.

Comment

Interestingly, as part of our online fees shop, due for launch at the end of this month, we are developing and electronic signature solution for us although many pension and investment companies may still insist on wet ink signatures. 

Certainly, it is proven in UK law that an electronic signature is sufficient for a commercial contract but not acceptable just yet for Wills and a working party is reviewing this as part of a judicial review.