Most financial services firms will be executing documents on a weekly if not a daily or hourly basis: two or more parties agreeing to be bound by a set of terms. Sometimes boilerplate text is automatically rolled out thousands of times per day. Sometimes text is painstakingly negotiated over months to a final draft.
In most cases these documents must be generated, printed, signed, enveloped, stamped or franked, posted, received, opened, countersigned, scanned and held on file. Often if the document isn’t properly signed and held then the related business is blocked until it is.
How many thousands of hours are wasted each year in British businesses chasing up signatories to get these hard-copy contracts on file? No idea. But judging by the frustrations expressed by those we speak to in FCA compliance roles it must be huge.
It doesn’t help that regulation is tightening around this process, for example in the case of trust acknowledgement letters which used to be subject to a 20 day grace period. Firms that don’t have the paperwork duly signed on file in advance of doing business risk fines that can run into millions.
Enter electronic signing. At a recent workshop, I asked the assembled delegates of CF10as and senior compliance offices from medium and large CASS firms how many firms used electronic signing. No hands went up – I was surprised at the complete absence of this tech and a potentially massive cost saving missed.
Electronic signing enables documents to stay fully in digital format throughout the signing process. A PDF can be emailed to the recipient, signed securely on their computer using a mouse, and emailed back to the issuer. This leaves the typical process looking like this:
- envelope opened
- held on file
So 7 steps removed from 11, postage costs eradicated, and not a biro in sight.
So how does a firm get set up for electronic signing? Ah… therein lies the rub, as they say. Not as straightforward as you might think. Speaking as an electronic-signing-setup-survivor, I thought it might be useful to share some experiences to help those about to embark on the journey.
Surely it’s as simple as Googling providers, shortlisting, getting a quote and registering for an account? [I’m not sure how to write the sound of mirthless laughter but imagine it written here].
Issue 1: Selecting a Provider
Adobe was the pioneer of electronic signing and their service Echosign (now eSign) is one of the two big ones. The other is Docusign. So those are the natural choices for mainstream corporate use-cases. There are then a plethora of smaller players which inspire varying degrees of confidence, including some with frankly weird names.
Issue 2: User Licences
Typically a licence agreement has a number of named users from the client firm that are registered to send electronic documents for signing. This works fine if you localise the job into a handful of people in a particular team but if you have many individuals across the firm issuing documents direct then the costs can mount up. Fortunately the recipients are usually unlimited.
Issue 3: Fair Usage Policy
You are likely to hit something called a Fair Usage Policy (or FUP) which states a maximum number of documents that can be sent for signing by a single user in a year. This will usually be in the region of several hundred but if you go over this limit then you’ll be into the per-transaction costs….
Don’t worry too much about the FUP as a hard-limit: the providers we spoke to won’t be switching off the service if you go over, you’ll just get a call from a sales rep who’ll be looking to do a deal on the excess requirement.
Issue 4: Per Transaction Costs
Once your ‘fair usage’ allowance runs out then you’ll be paying by the drink and you’d better put your best pit-bull negotiator on the phone as the cost-per-transaction for the supplier approaches zero, their sales people will be trying to maximise the sale. This means you’ll be starting high (several quid per transaction) but can get good discounts for volume, although volume usually means tens of thousands of transactions per year.
All Things Considered
We and our clients still feel that the time and cost benefits of electronic signing are so great that the setup headache is worth it. Our clients have had FCA approval for electronic signing in principle and we are hearing more frequently of the main banks giving the green-light to clients sending documents for electronic signing.
Go ahead: champion the move to electronic signing and save your firm a lot of money.