eSignatures can be just as safe or even more than pen-and-paper signatures. The legal and technical framework for adopting eSignatures in the UK has been in place for a while. But hesitance and uncertainty has kept them from being widely embraced. As smart contracts grow in prominence, eSignatures are a natural extension.
The Industry Working Group’s Main eSignature Goals
The eIDAS Regulation was passed in 2014, which established the rules for usage of eSignatures. Then in 2019, the Law Commission produced a report that concluded that eSignatures are valid for most transactions.
Despite these legal advances to promote eSignatures, people still didn’t have the confidence to use them. To encourage uptake of eSignatures, the Industry Working Group was established, which provided practical guidance on how to use eSignatures.
The Covid-19 pandemic showed that digital interactions are possible and desirable, but not as widely used as they ought to be. The Industry Working Group hopes that its work will enable eSignatures to be used not only among multinational corporations, but across society as a whole.
The Industry Working Group focused on two main recommendations. One was that the government makes eSigning available for all official documents, which is currently not the case. This includes sale contracts with its suppliers. The other is that UK citizens should be encouraged to adopt a digital identity. This is available as a right in many Western European countries. While the UK doesn’t offer national ID cards, it can still be done. This would revolutionize the speed of executing transactions.
Here are some key high-value activities the Industry Working Group carried out:
- Analyzed what needs to happen in law to encourage technological uptake
- Ensured buying and selling of property in the UK can be carried out electronically more often. The UK is now widening the scope of eSignatures and conducting a pilot scheme concerning the execution of deeds.
Additional UK eSignature Recommendations
The Industry Working Group made several recommendations for future analysis and reform. These eSignature best practices are summarised below:
- The group supports the concept of Qualified Electronic Signatures (QES), particularly if underpinned by a regulated digital identify trust framework, would be capable of fulfilling the same objectives as physical witnesses and attestation of documents, such as deeds.
- A growing number of agreements are now performed in an automated way, such as smart contracts. Since smart contracts often require an electronic signature, the increased use of these contracts will lead to a greater uptake of electronic execution practices. Therefore, the goal of showing how electronic execution can be undertaken simply and effectively is ever more important.
- A cross-border database of permissible regulatory and execution modes should be established, starting with major trading partners. The database could be maintained by government or a not-for-profit industry organisation offering subscription access.
- The group fully supports the work by DCMS to set up a trust framework as this will facilitate the use of electronic signatures in future.
- Government should take steps now to adopt the use of electronic signatures in its transactions with third parties, whether providers of goods or services to government or the public. Government should also ensure that as many official documents as possible, which the public may have to execute, can be executed electronically (examples include Lasting Powers of Attorney and wills). The group considers that the Government acting as an “early adopter” in this way can only encourage the widest possible use of electronic signatures within society, ultimately saving costs and time, and demonstrating that this jurisdiction is fully embracing digital capabilities.
- Standardisation is likely to facilitate the use of electronic signatures. Both the HMLR’s Practice Guide on the execution of deeds, and the Ministry of Justice’s Modernising Lasting Powers of Attorney project are good examples of how this might work.
- The group recommends that the temporary provision allowing remote witnessing of wills be extended permanently.
- The group were split in their views on whether official certification or so-called “kitemarking” ought to be imposed on platform providers further to build confidence. The pros and cons of this are set out more fully in the report.
eSignatures Are the Future in the UK
The Industry Working Group hopes that in the next three to four years, eSignatures will be not only widely adopted, but the norm rather than the exception. This would benefit everyone in terms of reducing costs, improving speed of transactions, and ensuring the UK is at the forefront of the digital transformation.