On 20 April 2020, the FCA set out its expectations of firms when dealing with the need for ‘wet-ink’ signatures (i.e. signing a document by hand using a pen).

Key points from the FCA are:

  • Agreements: FCA rules do not explicitly require wet-ink signatures in agreements, nor do they prevent firms from using electronic signatures in agreements. The validity of electronic signatures is a matter of law. Firms should consider the legal position themselves because the FCA cannot give legal advice.
  • Firms must also consider any related requirements set out in its Principles for Businesses and general rules. For example:
    • Firms should consider Principles 2, 3 and 6 and review the risks and harms of using electronic signatures, and take appropriate steps to minimise those.
    • Firms should consider the client’s best interests rule (COBS 2.1.1R) and the fair, clear and not misleading rule (COBS 4.2.1R) to ensure that, when a client signs a document electronically, this does not make it more difficult for the client to understand what they are agreeing to.
  • Forms: The FCA has recently stated that it would accept electronic signatures for fund-related applications and on all applications from mutual societies. The FCA confirms that firms may use electronic signatures for all interactions with it.