By Hayley Bruce, associate and practice development lawyer at Irwin Mitchell
This month the Land Registry has published a new practice guide: ‘Encouraging the Use of Digital Technology in Identity Verification'. The guide sets out a new ‘Safe Harbour Standard’, an enhanced digital identity standard which will use biometric and cryptographic security features together with face recognition to identify parties involved in property transactions.
Identity checking has often been a criticism of the conveyancing process, with parties having to be identified at different points in the transaction, by different agents and to different standards.
Opportunities for fraudsters increase year on year as property transactions and interactions between conveyancers and their clients become increasingly digital. The new standard may go some way to ease some of these concerns, but this is an early step by the Land Registry and there is still some way to go. Not least, at present there is no provider in the market who has a solution which meets the new requirements.
The Land Registry have said that they don't expect an overnight adoption of the practice, but their historic collaborative approach to working with technology solutions businesses will mean that this standard should be taken seriously and is likely to come into the mainstream market at some point in the future.
The new standard includes four requirements. First, for the representative (solicitor or conveyancer) to obtain evidence of identification; this identification must contain biometric data, such as a biometric passport.
The second requirement is that this evidence is checked, which will ultimately involve using an identity check provider’s system, which will check the cryptographic security features.
The third requirements is to match the evidence to the identity - again, this relies on the identity check provider, but also includes a ‘liveness’ test which may involve the party participating in a video or photograph for facial recognition purposes.
The final requirement is to ensure the party is the same person as the entity owner, which requires the conveyancer to obtain and check evidence linking the person to the property, such as utility bills or other proof of address. There are further requirements if the party is a company or corporate entity.
It's clear that not everyone will be able to reach this standard. Some clients won't have passports or the technology available to participate in a ‘liveness’ test. However, the Land Registry provides this as a ‘Safe Harbour’ standard. This means that, if adhered to, the Land Registry will not pursue any recourse claim against the conveyancer resulting from the registration of a fraudulent transactions on the grounds that the identity checks were inadequate.
However if the standard is adopted as a requirement by mortgage lenders or legal regulators, or if a provider of legal professional indemnity insurers offer reduced premiums to conveyancers who meet this standard, we could see some very unfortunate results. Ultimately, this would limit consumer choices or even prevent some from property ownership.