The long awaited Electronic Communications Bill finally received Royal Assent at the end of May, although electronic signatures will not become a reality until the end of July.
Once legal, electronic signatures are expected to fundamentally change the way in which mortgages are delivered and the manner in which financial business is conducted in general.
The are two parts to the Act with particular relevance to the mortgage industry – electronic conveyancing, which has the capacity to reduce the time it takes to purchase a house from several months to a few weeks, and, more importantly, the legal admissibility of electronic signatures.
The framework is now in place for the entire mortgage process to be conducted online, which will reduce the amount of paperwork and the time taken to approve finance.
E-Minister, Patricia Hewitt, said the Act would hasten the onset of the paperless office.
She said: “This new legislation will create confidence in doing business electronically, giving legal certainty to electronic signatures and encouraging the development of secure and trusted e-commerce services.”
Michael Bolton, marketing manager at Future Mortgages, has no doubts that this will cause a sea-change in attitudes towards interactive applications.
“At present the one caveat of the online process is that we will receive the application online, we will process it, but when we make the mortgage offer we must print out the application and send it out to get the signature,” he said.
He believes the mortgage industry has to make up a lot of ground before it can compare itself to other established e-commerce industries and that it will be several months before most can fully utilise the legislation.
Simon Nixon, chief executive of Mortgage 2000, warned that lenders and brokers will need to act quickly to take advantage of the new legislation.
He said that software needs to be updated and brokers need to be persuaded to go online, adding that if they did not they could lose 20% of their business.