Industry group fails to agree on regulation of e-signatures

Electronic signatures: Majority of group backed regulation through self-certification

A government-backed industry working group has failed to agree in its final report on electronic signatures how, or whether, e-signature platforms should be regulated.

The group, chaired  by Mr Justice Fraser and Law Commissioner Professor Sarah Green, agreed on all other issues and called on the Law Commission to consider reform of the law on deeds and statutory declarations to encourage use of e-signatures.

The Law Commission recommended in its 2019 report on e-signatures that a multi-disciplinary group of legal, business and technical experts should be set up to consider practical and technical issues and identify solutions.

In its interim report this time last year, the group said the most sophisticated kind of e-signatures could be “more reliable” than signatures witnessed the traditional way in an “unsupervised environment”

In its final report, Electronic Execution of Documents, the group said trust by the public and business in e-signature platforms was “fundamental to wider adoption and use” of e-signatures.

However, on the issue of regulation, the group was split between a “free-market” and a “pro-regulation” point of view.

Most members were in the “pro-regulation” camp, arguing that “some sort of approval or oversight mechanism is required so that some order can be imposed on what is, currently, the technological Wild West.

“Currently, any entrepreneur can establish a platform offering e-signature services, with no way of a consumer or other user (including business users) being sure of the degree to which security and audit needs are satisfied.

“Obviously, aiming to use a platform or e-service offered by an existing industry name will minimise or even totally reduce such concerns, but that can simply mean that there are invisible barriers to other, smaller platform providers gaining a foothold in what is likely to become a major market.”

Most members backed regulation through self-certification, with a “transparent and industry-agreed set of standards or benchmarks” against which platforms could self-certify.

However, a minority backed the “free market” point of view, arguing that “only the best (or the adequate) will survive” and regulation was both “undesirable and unworkable in practice”. It could inhibit innovation, international trade and external investment.

“There is the added burden of expense for a system of regulation, as well as the requirement of decision by government as to which body would oversee this area, and how.”

The industry group recommended that a set of minimum standards be introduced to boost public confidence, while the government considered certification/self-certification of platforms for “significant transactions” only.

The government should also work towards achieving “uniformity of approach to e-signing and online identification by way of an international standard or mutual recognition”.

As in the interim report, the group recommended “wholesale adoption by government in the UK of e-signatures for all government or official purposes”.

The Law Commission should consider reform of the law relating to deeds, and in particular the formalities surrounding their execution.

It should also consider removing the requirement for a third party to be involved in making a statutory declaration “and allow declarations to be made wholly electronically in a straightforward manner and without risk of invalidity”.

The working group added that the government should consider setting up a “permanent body” similar to itself, which should be “properly funded rather than work on a pro bono basis”.

The use of e-signatures and e-commerce generally were “so important for the future of society in the 21st century” that a more “formalised and focused” approach was needed.

    Readers Comments

  • The Legal Mafia says:

    “The future”? The rest of the world have been using e-signatures for 10+ years!

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