Phil Young: A common sense approach to proof of identity


One of the big distinctions between dealing with a financial advice firm and dealing with a financial institution is the ability to think, adapt and offer flexibility where the occasion arises.

Approaching a large financial institution can feel like dealing with an impersonal utility supplier. Going through the same call centre and answering the same questions in the knowledge nothing will happen seems to be part of modern living.

But it does not have to be. Let’s take confirming client identity as an example. While you might not deal with clients who fit the scenarios below, they illustrate how there is no need to be depressingly inflexible.

I am not suggesting anyone goes outside the normal process without good reason but not everyone is able to produce the usual photographic ID and address. For example, someone who has been registered blind from a young age is unlikely to have a passport or driving licence.

You need to satisfy yourself, as far as is reasonably possible, that the client is the person they claim to be. If you have grounds to conclude a client is not able to produce the detailed evidence of their identity and cannot reasonably be expected to do so, you can accept as evidence a letter or statement from a person in a position of responsibility who knows the client.

This needs to show the client is who they say they are and confirm their permanent address if they have one. People in positions of responsibility include solicitors, doctors, ministers of religion, teachers, hostel managers and social workers.

Where a statement is accepted from a professional person, it should include a contact number for verification. You might want to verify the information provided by the professional person from an independent source.

Other types of evidence to confirm an address include:

  • Letter from the matron of a nursing or residential home
  • Letter from the Benefits Agency
  • Tenancy agreement from a local housing association
  • Letter from the householder with whom the applicant is living, who is named on a current copy of a council tax bill
  • Letter from a hostel manager confirming temporary residence

Students and minors

When opening policies for students or other young people, your normal identification procedures should be followed.

However, where they are not relevant or do not provide satisfactory identification evidence, you can obtain verification from the applicant’s workplace, school, college, university or care institution.

This confirmation letter should be on appropriately headed notepaper and you should pay due regard to the period of existence of the institution and whether it is subject to any regulatory scrutiny. Take care at the start of the academic year before a student has taken up residence at the college because registration frauds are known to occur at this time.

Often, a policy for a minor will be taken out by a family member or guardian, who may well be your client. In cases where the adult taking out the policy does not already have a relationship with your firm, the identification evidence for that adult, or of any other person who will operate the policies, should be obtained in addition to one of the following in the name of the child:

  • Birth certificate
  • Passport
  • NHS medical card
  • Child benefit documentation
  • Child tax credit documentation
  • National Insurance card (for those over 16)

Powers of attorney and third party mandates

Advisers will be more familiar with dealing with powers of attorney and third party mandates. However, in addition to obtaining identification evidence for holders of the power of attorney or deputies, as well as the client and subsequently on a later appointment of a new attorney if applicable, it is important to check the reason for the granting of the power of attorney and the exact powers they have been granted. Failure to do so means you and the attorney might be going beyond the remit of those powers.

You might think some of these are obscure examples but we hear about them in the press quite regularly and are increasingly conditioned into accepting compliance policies as inviolable law. They are not, and we often need reminding of that.

Phil Young is managing director at Threesixty