Identity proofing can be a frustrating and time-consuming part of the home buying and selling process for all concerned. However, plans to streamline it by digitising identity checks recently took a step forward after the government announced its intention to draw up new legislation making virtual forms of ID as trusted and secure as physical documents.
Furthermore, a digital identity trust scheme called ‘MyIdentity’ which has been piloted since last year, has been given the green light for beta testing in the Financial Conduct Authority’s regulatory sandbox – one of the final steps before a product is made generally available.
It’s not a new idea – last year, HM Land Registry introduced a digital ID standard for conveyancers to confirm their clients’ identities involving both biometric and cryptographic checks. The vast majority of CLC-regulated practices already use digital tools to check identity, sanctions status and to make anti-money laundering checks.
However, it is a significant development, which is set to benefit both consumers and the estate agents, mortgage brokers, conveyancers and other professionals involved in a property transaction.
Benefits
The government is encouraging all sectors to adopt digital identity verification although there has been some reluctance, thought to stem from concerns about sharing personal data online.
In fact, experts believe verifying identities virtually rather than physically is actually quicker, cheaper and safer.
Digital identity checks can be completed in a matter of minutes, while the manual processing of documents can take days or even weeks. They can also be carried out from anywhere, which is particularly useful for clients who may, for example, be ill or live far away so struggle to attend in person.
Saving time means saving money as it enables the legal work to start sooner. Once processes are set up, they can also be used with all clients.
But such is the reluctance that LawtechUK – a collaboration with the Ministry of Justice among others, aimed at supporting digital transformation of the legal sector – and its Regulatory Response Unit, which brings together all the relevant regulators, have just issued a statement highlighting the benefits of digital ID tools.
The digital identity standard already used in conveyancing shows how robust these checks must be. It combines a number of technologies including biometric verification, such as facial recognition or fingerprint scanning, ‘liveness’ tests where technology is used to detect a genuine presence on the other end of the device, and cryptographic checks, where only the sender and recipient can view the message. These reduce the risk of human error and also mean information can be encrypted and stored digitally which, in turn, reduces the risks associated with physical storage and management of documents.
The future is digital
Previously, firms may have been reticent to roll out digital checks if they were not confident that the technology they were using was secure enough, but the aforementioned schemes should provide that clarity and certainty.
So confident is HM Land Registry that it has said it will not take action against conveyancers who adopt its digital identity standard in the event of a fraudulent transaction as they will be deemed to have properly carried out all the necessary checks.
Digital identity checks are becoming more and more common and we can expect it to become the norm in legal services, just as it already is in sectors such as banking.
It’s important to note, however, that manual ID verification will still be appropriate in certain circumstances, such as where a client is unable or unwilling to use digital tools, so firms should be comfortable using both.
Stephen Ward is director of strategy and external relations at the Council for Licensed Conveyancers
