Why are we still using wet signatures for Letters of Authority?

There are few things more bizarre in modern financial services than printing a form, signing it with a pen, scanning it back in, emailing it, or posting it to someone as proof of (1) identity and (2) agreement.

And yet, every day, almost 16,000 signatures are required for a letter of authority for a pension, protection or investment product.

In 2025, with open banking, verified e-signatures, secure digital IDs, and cryptographic authentication, requiring a wet signature for a Letter of Authority (LOA) is more than outdated — it’s absurd.

According to the #LogYourLoAPain campaign, nearly four million LOAs are sent annually. These documents consume 985 years of collective processing time, tie up over 5,500 full-time employees, and cost the industry £442mn a year.

To put that in perspective, it’s nearly twice the annual cost of deferred small pension pots currently under government review.

Bizarrely, the wet signature is regarded as the gold standard for identity verification.

In reality, it fails on nearly every front — particularly in workplace pensions where no signature is even held on file to compare against. It’s a security theatre at best.

Digital signatures, in contrast, offer both convenience and verifiable & auditable security.

With current LOA processing by some providers already stretched, the last thing we need is more manual paper-chasing and checking

The European eIDAS framework has defined electronic signature standards since 2016. But here’s the kicker: the most basic level of eIDAS compliance requires little more than an email verification — the digital equivalent of saying “trust me.”

That’s fine for low-risk transactions. But when dealing with the transfer of thousands of pounds in pension assets, we need more.

What’s frustrating is that significantly more advanced systems are already in use.

Some digital LOA solutions now include cryptographic time-stamping, tamper-evident documents, dual verification mechanisms, and end-to-end audit trails.

These go far beyond the eIDAS minimum and mainstream tools like DocuSign offer. Yet DocuSign is considered the standard level of e-signature assurance and acceptance.

Tidal wave of LOAs coming

As we look ahead to the rollout of pensions dashboards, industry leaders warn of a coming tidal wave of LOA requests. One provider predicts an eight-fold increase.

With current LOA processing by some providers already stretched, the last thing we need is more manual paper-chasing and checking — and Dickensian signatures used as security.

And here’s a crucial point: transfer times reported via initiatives like STAR don’t factor in LOA processing delays, which if done manually, can add an average of 59 days to the timeline.

We’ve normalised an administrative farce — one that burns money, time, trees, and trust

This isn’t just inefficient — it’s a poor customer outcome, thanks to one bad customer experience after another.

Ironically, providers still demand wet signatures citing compliance, risk and/or legal. But, as far back as 2019, the Law Commission confirmed that electronic signatures are valid. But here’s my view: What is missing isn’t legality — it’s the courage to change.

The FCA’s consumer duty makes it clear: we must avoid foreseeable harm and support customers in achieving their financial objectives.

It’s hard to argue that wet signatures — as a form of identity check and agreement to proceed — meet our responsibilities and service expectations in 2025.

We’ve normalised an administrative farce — one that burns money, time, trees, and trust. It’s time to move on.

The technology exists — and the standards are published. Some parts of the industry are already years ahead. But as long as even one provider demands a wet signature, everyone is forced to build around the lowest common denominator.

In 2025, no one should be proving their identity with a biro and a scanner.

Scott Phillips is CEO and founder of Pension Lab