FSCA Guidelines on Electronic Signatures and Prepopulated Documents

The Conduct Authority has issued FSCA Communication 12 of 2021 (FAIS) as a result of a number of concerns relating to the use of electronic signatures in the course of rendering financial services and the use or prepopulated forms or documents.

The FSCA is not opposed to the use of electronic signatures by clients to conclude an agreement with a product supplier. It is, however, concerned that the use of electronic signatures of clients by the FSPs has the potential to expose clients to the risk of fraud, forgery and theft of client assets  that would arise from possible unauthorised transactions entered into, ostensibly on their behalf. A particular concern relates to the use of scanned signatures.

Some FSPs utilise scanned images of handwritten signatures of clients to “sign” documentation on behalf of clients. In the view of the FSCA, a scanned image of a handwritten signature embedded into a document does qualify as an electronic signature as defined in Sections 12 and 13 of the Electronic Communications and Transactions Act, No. 25 of 2002 (“ECT Act”). However, the use of an electronic signature of a client by an FSP should not be looked at from the perspective of the ECT Act only.

Section 7(2) of the General Code of Conduct states that no provider may, in the course of the rendering of financial services, request any client to sign a written or printed form or document unless all details required to be inserted thereon by the client or on behalf of the client have already been inserted. This requirement therefore means that an FSP must request a client’s signature only after all the relevant details have been inserted by the client, or on behalf of the client, to enable the client to apply his/her mind to what they are binding themselves to.

In addition, Rule 9 of both the Long-Term and Short-Term Policyholder Protection Rules provides that –

“No insurer or intermediary may in connection with any transaction relating to a policy require, permit or allow a policyholder, potential policyholder, member of a group scheme or potential member of a group scheme or claimant or potential claimant to sign any blank or partially completed form necessary for the purpose of the transaction, where another person will be required, permitted or allowed to fill in other required detail, or conclude any such transaction where any such signing and providing of detail have occurred.”

Paragraph 2.4 of the FSCA Communication 12 of 2021 (FAIS) states that, unless a particular provision of the applicable legislation requires differently, the parties are free to decide whether they are desirous to conclude a transaction by way of conventional means or via electronic means requiring an electronic signature. Should they agree on the latter, an electronic signature is legally permissible.

Paragraph 2.5(d) highlights that one of the steps an FSP can take to ensure reliability is to use a service provider for authentication.

Moonstone and Videosign

We offer an online platform which incorporates substantially more than just an electronic signature. Videosign combines online video meetings, secure digital signing, innovative and detailed identity checks and verifications, and robust compliance features which help advisors to close more business and offer a better customer experience while following the advice process and saving time and money.

• Audit trail records are appended to every signed document automatically, giving full details of each signee, witness or meeting participant; their IP address, time, date and device – as well as a photo of the signee captured at the point of signature.
• Validate digital signatures with embedded digital certificates, video recordings and detailed audits of signing events. Not only can video recordings be used as records of advice, they are evidential and can be used in courts (may vary by jurisdiction) as evidence in litigation cases.
• Customers’ identities are verified efficiently and remotely via a biometric identity verification system. This protects your business and customers from identity theft fraud.

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