The Financial Sector Conduct Authority (FSCA) recently published FSCA Communication 12 of 2021 which provides guidance to FSPs and Representatives on the use of electronic signatures and pre-populated documents.
With many working remotely due to the COVID-19 pandemic and resultant lockdown regulations, there has been an increased use of electronic signatures. It has come to the attention of the FSCA that there are FSPs that use electronic signatures of clients when rendering financial services – with or without consent.
The use of a client’s electronic signature by an FSP should consider the provisions of the Electronic Communications and Transactions Act (ECT Act), FAIS General Code of Conduct (GCOC) and the Long-term and Short-term Policyholder Protection Rules (PPRs).
According to section 7(2) of the GCOC, no provider may, in the course of the rendering of a financial service, 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 means that an FSP:
a) may not request a client to sign a blank or partially completed document;
b) may complete documents on behalf of the client;
c) 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 PPRs 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.”
These provisions are aimed at ensuring that a client is fully appraised of the contents of a document. The FSCA Communication states that although an FSP can complete documents in relation to the rendering of financial services on the client’s behalf, the FSP must request the client’s signature i.e. the client must sign the document (the FSP should not be using the client’s electronic signature as if the FSP is the client).
While the FSCA is not opposed to the use of electronic signatures by clients, the FSCA strongly recommends that FSPs refrain from the practice of using clients’ electronic signatures, even where consent is provided. The FSP cannot affix (or paste in) an electronic signature that belongs to the client to the client’s application or other documents. Instead, the FSP must request the client to sign the document (the client can affix their own electronic signature) after all the relevant details have been inserted on the documents to enable the client to apply his/her mind to what they are binding themselves to.