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Signature tune

I believe that Royal Liver IFA market manager Andy Milburn has done the Association of British Insurers a favour by pointing out that its forthcoming guidelines on improved clarity for telephone and online applications for protection business need to identify a consistent approach to the issue of signatures.

This message may not be well received by the ABI, however. It has responded by saying signatures and their use were never in scope for this particular study.

If that is the case, I think Andy has demonstrated ample reasons why the scope of the work might be revisited. It must be better to flag now what is needed and examine this issue further rather than have the ABI’s efforts to achieve more consistent processes in the market fail because it has not addressed difficult issues.

From an IFA perspective, the wide variation in approaches used by providers is a major barrier to making electronic transactions the standard way we do business as an industry.

Increasing volumes of business are transacted using other means than paper but we still seem to have the mentality as an industry that transactions are primarily paper-based and we look at automating individual processes in a piecemeal fashion. In my view, we need a fundamental change of mindset. In the 21st Century, should not paper become the exception rather than the norm?

How many providers still start with a paper process when bringing new products to the market? Royal Liver, to its credit, resisted this temptation when it launched its protection proposition a few years ago but how many other providers have subsequently failed to take such brave steps?

Given the widespread aspiration to move to more efficient ways of processing, does not entering a market with a paper-based application and an aspiration for e-commerce mean launching a process that will inevitably become redundant?

I do not want to get hung up on the need to totally remove signatures, desirable though that would obviously be, until we see some fundamental change in the attitude of the Financial Ombudsman Service.

I agree with Andy that we need a way to accommodate hard signatures to protect both advisers and providers. I have long felt that although some life offices may not require a signature to be provided on a protection proposal, in the interests of protecting advisers against potential FOS claims and reducing their professional indemnity premiums, they should obtain specific confirmation from the proposer that the information submitted electronically is correct.

Ideally, this means the provider should immediately make available to the adviser a summary of the data used that can be accessed by the client and the client can confirm is accurate.

Trying to identify a mechanism to do this, however, is a good way to demonstrate how complex a process could be in reality.

It might seem obvious initially to simply obtain a PDF file of the data and email this to the client but email is not a secure form of communication. Many levels of security can be embedded into PDF files but the vast majority are distributed with no protection. Emailing an unsecured PDF file could therefore represent a breach of data protection.

Until a robust electronic process can be found that satisfies the FOS, we need to introduce mechanisms that do not hold up the process while the signature is obtained, yet still enable the added protection that the current FOS perspective makes necessary.

This means proceeding with the application based on the electronic submission and issuing a confirmation schedule for the proposer to sign and return.

The ABI paper rightly stresses the importance of delivering confirmation of the information that is used as the basis for underwriting where a third party has been involved in the submission of the case.

It appears to be a regrettable reality, at least as far as online applications are concerned, that the FOS appears to treat involvement of a third party in the transaction – the adviser – as a negative factor as they might have in some way interfered with the information provided.

It might be useful to examine if there is a viable electronic alternative to this. For example, could an email be sent to the client with a link to an electronic representation of the proposal information?

Such a process would inevitably mean the proposer would need to register with the provider’s web service and establish a log-in. They might then review the information on screen and click a box to confirm it to be correct. I am not saying this is the solution but am seeking to demonstrate that there may be other ways to approach this.

I appreciate that, in at least one ruling relevant to protection, the FOS decided that information rendered on screen was not as easy for consumers to understand as paper. Unless we are permanently to condemn our industry and its customers to operating using processes that belong firmly in the last millennium, however, is it not important to try a little harder to find a solution?

If we as an industry start to put in place processes that mean adviser, provider and client are increasingly communicating electronically, there may be other areas where cost can be taken out, such as annual statements and other information that is delivered to clients periodically.

There is a need for the industry to work together to arrive at a solution that meets the needs of provider, adviser and consumer. If it takes longer to come up with a solution that truly enables great use of online facilities, this would be a valuable service to the industry.

Now Andy Milburn has put down a marker, the signature issue needs to be addressed by the ABI, anything less would be disappointing.

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