With HM Land Registry’s Safe Harbour Standard, conveyancing will lead the way in digital ID
Digital identity checks have been a key focus for the UK Government over the past year, with various initiatives having been announced throughout 2020, and with HM Land Registry’s recently unveiled ‘Safe Harbour Standard’ the conveyancing industry will be leading the way in terms of best practice.
HM Land Registry launched a draft set of requirements at the end of last year in order to encourage digital identity checks in the conveyancing process and provide a ‘Safe Harbour’ for those conveyancing firms who use a digital ID provider that meets the Safe Harbour standard. Conveyancers using an ID provider that meets the standard won’t be pursued by HM Land Registry in any recourse claim against a conveyancer, resulting from the registration of a fraudulent transaction, on the grounds that identity checks were inadequate.
This is a positive step for the industry. Conveyancing has long been seen as an attractive target for fraudsters and we often hear of firms falling foul of their regulatory obligations. Back in November, for example, it was reported that a legal services firm that failed to carry out sufficient identity checks on conveyancing transactions was fined £14,000 by the Solicitors Regulation Authority (SRA).
The pandemic has also provided fertile ground for increased rates of identity fraud in 2020. A combination of firms transitioning to remote working, social distancing measures making client due-diligence harder and a turbulent economy providing more opportunity for fraud has led to the perfect storm for identity fraud. Mobile payments business Jumio recently stated that fraud had risen by as much as 60% in the pandemic.
The proposed standards will also help give clarity to law firms, at a time when there has been a huge proliferation in the use of digital ID. Indeed, this has been largely accelerated by the Covid-19 pandemic and social restrictions that have been introduced as a result. At the same time, there are clear benefits to consumers in accelerating the digitisation of the conveyancing process. Currently, manual onboarding processes can take up to two weeks, contributing to the ever-lengthening property buying and selling process, which now sits at 20 weeks. With digital identity checks taking a matter of minutes, admin time at the start of the transaction can be cut significantly, allowing the legal work to start sooner. Digital identity checks can be carried out from anywhere, which is useful for those clients living abroad, or as the pandemic continues, during any periods of lockdown and for vulnerable clients who continue to shield.
To date it’s been a major challenge for conveyancers to determine whether the tools they are utilising are fit for purpose, meaning that, as the market has developed, the bar for digital ID acceptance has gotten very low. This can actually increase the risk of fraud. For example, ID verification technologies that purely validate the authenticity of a document via a photo, with no liveness detection, are arguably more dangerous than manual checks as they discourage face to face meetings, which although not ideal, are still a good way to verify your client’s existence and ownership of an identity document.
The industry standards that have been proposed by HM Land Registry are comprehensive and based on the guidelines set out in the Government’s Good Practice Guide (GPG) 45. They will involve the use of biometric and cryptographic technology and should not only encourage the uptake of digital identity checks by conveyancers, but give conveyancers ‘clarity and certainty’ that they have discharged their duty on identity verification in connection with land registry applications.
To be considered as satisfying the standards as currently proposed, the best providers will need to utilise a range of different technologies including biometric facial recognition, Near Field Communication (NFC), liveness checking and for certain types of property transaction, the ability to collect evidence of proof of address. In combination, these technologies ensure providers can collect identity evidence, confirm that the evidence is genuine, match it to the identity of the person presenting it, and connect the client to the property in the case of transferors, borrowers or lessors. Only in meeting all of these requirements, will the standards set out by HM Land Registry be satisfied. It’s worth noting that these standards are subject to a consultation process, which ended on 11 December.
In making these recommendations, HM Land Registry has set the threshold very high and obviously there will be some challenges ahead for e-IDV providers to ensure their product is built to reach these requirements. For example, the NFC technology will require providers to have a native app, as opposed to an online portal, and this technology only works with biometric chip-enabled identity documents, primarily passports. This means both providers and conveyancers must be considerate of those clients who may not possess such a document and provide alternative ways for them to verify their identity safely and compliantly.
Despite these challenges, however, there’s no doubt that these are positive changes for the industry. From cutting fraud risk, to saving conveyancers and their clients valuable time and money, digital ID verification is the future and it’s hugely positive that conveyancing is at the forefront of these developments. We look forward to the standards being finalised and helping law firms to achieve Safe Harbour status.