Digital Signatures and Fraud

As many of you will have noted, lately, we've seen a distinct shift in providers' approach to document sign-off with digital signature systems.

Thursday, March 28th 2024, 9:58AM

by Jon-Paul Hale

This subject has been one I have been actively watching and pushing on for nearly 30 years, ever since I dropped a seven-figure bank transfer request with bank account details on my commercial manager's desk, signed by him, to convince him to rescind the fax transfer authority at the company bank back in 1997/1998.

That discussion was an interesting one. The usual comment, "I know what I sign," was countered by my comment," Does the bank?" and then, 10 minutes later, I dropped said signed authority document on his desk.

The initial reaction was, "This is fraud, and you can't do that." I said, "I haven't used it yet, but it makes my point." Less than 10 minutes later, that fax authority for the bank was gone.

This was a couple of years before I came into financial services, and the job of fraud was not difficult to manage if you had the knowledge, as the technology of the day was more than adequate for the task.

Then, in the early 00s, we had Sovereign take the approach of no longer needing paper documents; scanning and emailing were acceptable. I saw a few examples of advisers doing dodgy things, all of which had their agencies cancelled. Still, it was few and far between that were spotted because it's damn hard to spot.

Fast forward another 20 years, and the technology has just improved. We have had a proliferation of providers move to scanned and emailed documents.

I've commented about providers trusting advisers, and while there are aspects of what we do with providers falling short on the test of trusting us. The element of scanned and emailed documents has been one where they trust us more than they probably should.

Since 2016, I've been using an iPad Pro with clients and have been completely digital on the adviser side of the process. This technology has been so good that in 8 years, I have not had a single question about "inked" signatures done on the iPad. Yet, in reality, any inked signature is pretty insecure. There will be many other advisers in the same boat.

The reality is that document integrity is heavily reliant on advisers doing the right thing: not taking shortcuts, being able to identify issues, and having robust processes around accepting digital documents.
* I think we as advisers need more training and understanding of these issues in the industry, which requires more work.

In one case I encountered, the previous adviser had accepted the wife signing for the husband on the application form. Could you tell the difference? Nope, but the wife confided in me that she had signed for both of them. Suffice to say I had a hell of a mess to tidy up with that; yes, I tackled it because it was very problematic.

In the last 12 months I have seen and heard about a distinct rise in fraud with providers. From the life cover case, I had with the insurer paying that claim a second time due to fraud, through to issues and challenges with people attempting to cash up WOL and endowment policies of parents and family members they don't have authority for.

Identity fraud and paper document security concerns are on the increase. Since Covid, we have also relaxed requirements around document handling; some are reasonable, and some are outright scary.

We've all had the "it must come from the email account we have on file" or "we won't accept drag-and-drop signatures" feedback on docs.
* Resolution Life requires a copy of the ID, a photo of the person signing with that ID, and everything else needed. It's a bit nuts, and not necessarily that secure either.
* Res Life has commented that they also have the challenge of older clients without effective ID, which has expired or just plain doesn't exist anymore.

There are some clear issues here, and other providers will be having similar challenges to Res Life.

I’ll talk tools and solutions in my next edition.

Tags: Jon-Paul Hale