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The growing use of electronic signatures benefits investors and industry alike, but it also raises an array of legal and compliance concerns, which has prompted the Mutual Fund Dealers Association of Canada (MFDA) to update its guidance on e-signatures.

The MFDA first issued guidance on the use of e-signatures in 2003, but since then,¬†“there has been significant evolution in the law with regards to electronic signatures, as well as an increase in the availability of technological solutions that facilitate the electronic signing of documents,” the self-regulatory organization said.

Fund dealers and reps are now primarily serving clients remotely due to the Covid-19 outbreak. The increased use of e-signatures “has improved efficiency and enhanced convenience to clients,” the MFDA said, and clients’ ability¬†to sign documents remotely “addresses concerns related to the use of pre-signed or altered forms.”

But the MFDA warned that the e-signatures pose security and privacy risks, and said firms should ensure that they are adhering to both federal and provincial laws in these areas.

The MFDA’s updated guidance on the use of electronic signatures calls on firms to ensure that they have adequate measures to ensure the authenticity of e-signatures, prevent fraud and meet audit-trail and record-keeping requirements.

The guidance also suggests that dealers consider guidelines issued by FundServ to standardize the use of e-signatures.

When dealers use e-signatures to comply with MFDA rules, “they must have policies and procedures regarding the acceptance and use of electronic signatures to ensure a consistent application of electronic signature policies among all types of clients and accounts,” the MFDA noted.