We have taken into account the Law Commission reports published in September 2019 and confirmed by the government in March 2020.
For agreements that have “consideration” (i.e. where both parties are giving something in exchange for what they are receiving), for example, a Client Agreement, Terms of Business or a Fee agreement, our system enables these agreements to be executed electronically.
For agreements that lack “consideration” there are 2 scenarios:
- For example, a Data Protection Policy is a statement of what a data controller is doing with respect to personal data, and does not need to be signed.
- Power of Attorney or other deeds: this requires a witness, so a wet signature is still required to ensure the document is validly executed, although we’re ultimately looking to find a 100% digital solution.
Online acceptance generally
Statement of the law: execution with an electronic signature
1. An electronic signature is capable in law of being used to execute a document (including a deed)provided that (i) the person signing the document intends to authenticate the document and (ii) any formalities relating to execution of that document are satisfied.
2. Such formalities may be required under a statute or statutory instrument, or may be laid down in a contract or other private law instrument under which a document is to be executed. The following are examples of formalities that might be required: (i) that the signature be witnessed; or (ii) that the signature be in a specified form (such as being handwritten).
3. An electronic signature is admissible in evidence in legal proceedings. It is admissible, for example, to prove or disprove the identity of a signatory and/or the signatory’s intention to authenticate the document.
4. Save where the contrary is provided for in relevant legislation or contractual arrangements, or where case law specific to the document in question leads to a contrary conclusion, the common law adopts a pragmatic approach and does not prescribe any particular form or type of signature. In determining whether the method of signature adopted demonstrates an authenticating intention the courts adopt an objective approach considering all of the surrounding circumstances.
5. The Courts have, for example, held that the following non-electronic forms amount to valid signatures:
- signing with an ‘X;
- signing with initials only;
- using a stamp of a handwritten signature;
- printing of a name;
- signing with a mark, even where the party executing the mark can write; and
- a description of the signatory if sufficiently unambiguous, such as “Your loving mother” or“Servant to Mr Sperling”.
6. Electronic equivalents of these non-electronic forms of signature are likely to be recognised by a court as legally valid. There is no reason in principle to think otherwise.
7. The courts have, for example, held that the following electronic forms amount to valid signatures in the case of statutory obligations to provide a signature where the statute is silent as to whether an electronic signature is acceptable:
- a name typed at the bottom of an email;
- clicking an “I accept” tick box on a website; and
- the header of a SWIFT message.
8. With specific regard to deeds and the witnessing requirements thereof, a deed must be signed in the physical presence of a witness who attests the signature. This is the case even where both the person executing the deed and the witness are executing / attesting the document using an electronic signature.
The report addresses the use of electronic documents by commercial parties and consumers, including trust deeds and lasting powers of attorney (LPAs). However, it does not extend to wills, nor to registered dispositions under the Land Registration Act 2002, which are explicitly excluded from the scope of our project. Wills are the subject of another Law Commission project.
From a regulatory point of view, there is no particular impediment to using electronic means for execution.
Prior to the client becoming bound by any agreement, the information that IFAs are required to disclose to their clients may be provided via a website, subject to some requirements. The use of a website must be appropriate (and this requirement will be met simply by the client providing an email address), and the client must give specific consent to receive information in the form of the website. The client must receive an electronic notification as to where the information may be found (i.e. an email containing a hyperlink). With regards to ongoing access to the information, it must be up to date, and accessible continuously for as long as the client may need to inspect it.
With regards to execution, the general requirement for entering into an agreement with a retail client is that the agreement is written "on paper or another durable medium". The range of media that would satisfy this requirement is quite broad. As long as the instrument allows the client to access the information for future reference, for a period which is adequate for the purposes of the agreement, then it will be considered durable.The regulator has specifically noted that the provision of information by a website will be appropriate where there is evidence that the client has regular access to the internet. This requirement is easy to satisfy, as the provision by the client of an email address will be sufficient, as above.
The Advicefront Electronic Signature system goes one step further and ensures that the documents can’t be altered once they’re signed. Trust in our security model is key to our success.
There’s a 2 step process to sign a document:
- A checkbox confirming the user has read the agreement
- A button which confirms the user wants to accept this agreement
At the moment the client accepts the agreement, we:
- Create an electronic fingerprint for the user
- Store the user’s fingerprint and embed algorithm into the respective document which will ensure the same document and signature are immutable
- Generate a PDF (permanent, immutable file) with the agreement and the date and time of the fingerprint (available to both client and adviser within our system)
- Building a Certificate of Acceptance, visualising for the client and Adviser the fingerprint information we hold within the system, confirming who signed it, when and where.
- Adding Two Factor-authentication (2FA) to belt and braces approach to guarantee that the same person that accessed the system is the same signing it.