CML response to Electronic Communications Act 2000

The Council of Mortgage Lenders (CML) represents mortgage lenders who are responsible for 98% of all residential lending in the United Kingdom. This is the Council's response to section 8 of the Electronic Communications Act 2000. In short, this section allows the appropriate minister to modify any enactment, subordinate legislation, scheme or licence in order to facilitate the use of electronic communications or electronic storage. The effect of this Act is, in the opinion of the CML, to allow a smooth transition from paper to electronic documents thereby enabling the entire conveyancing process to be done on-line. This will reduce delay and improve efficiency.

One limitation is that although electronic signature technology is highly secure, signatures could still be fraudulently misused unless the certification authorities are properly regulated. Controls could include adequate identification checks and strict guidelines for the use- and storage of certificated electronic signatures. Interestingly, cost benefits will not necessarily be apparent, as many practitioners will have to invest time and money in systems and training. Also, the responsibility for the authenticity of the electronic documents will rest on the conveyancer; this may increase professional indemnity insurance premiums and increased costs that could well be passed on to the consumer.

Given the competitive nature of the conveyancing market, the probable result will be that the larger conveyancing firms, which have most of the systems in place, will be the first to carry out the on-line transactions. A two-tier system will probably result with paper-based conveyancers slowing down e-based conveyancers. This problem will have to be addressed preferably by making it compulsory for all conveyancing to be done electronically after a certain date.

The response then goes on to the four conditions that must be met to ensure that the system functions properly and guards against fraud. These are:
1) Provision must be made for the time and date of effect, as the concept of "delivery" does not apply to electronic documents.
2) The electronic signature of each person who authenticates it is essential since this is the only way to prove that the parties agree to the content of the document.
3) Certification of the electronic signature is the only way to prove that the person liked to the signature is authorised to use it.
4) Flexibility to allow for additional security requirements in the future.

It would be useful to examine how this technology is used in E-commerce before implementing it in the conveyancing arena. Giving a solicitor or an authorised agent the right to act as an agent in authenticating electronic dispositions is seen as a practical and secure way of conducting electronic conveyancing.

Finally, electronic documents are seen as secure and reliable, so the need for attestation will become inappropriate for electronic conveyancing documents.

Council of Mortgage Lenders website

Electronic Communications Act of 2000

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