What's your policy on "reasonable steps"?
You've probably come across the term "reasonable steps" often since the introduction of VOI Rules. But what does it actually mean?
The VOI Rules introduce liability risks to your firm for fraud claims if you fail to take "reasonable steps" to verify the identity of your client and retain supporting evidence.
"Reasonable" has a legal meaning that sits between carelessness and perfection. What is "reasonable" in any situation will depend on the specific circumstances. To help provide consistency and certainty for conveyancers and lawyers, reasonable steps are deemed satisfied by following the VOI Standard. The Standard combines a face to face meeting with original ID documents outlined in Schedule 8 of the Model Participation Rules. If you or your Identity Agent follow the Standard you are deemed to have taken reasonable steps. This puts you in the "VOI safe harbour" which is a statutory shield against identity fraud risk.
"Reasonable" has a legal meaning between carelessness and perfection.
Having now done hundreds of thousands of VOIs we understand that not every client is going to fit neatly into the Standard. We also know that a client is not necessarily a fraud risk to you just because they are unable to produce ID documents which fully meet the Standard in every respect.
A written policy on your firm's approach to VOI and what may be considered reasonable steps in these instances should be a central pillar of your firm's risk management strategy. If you must depart from the Standard when identifying a client it's strongly recommended that you apply your judgment within the parameters of a carefully considered firm-wide policy.
Having a documented policy to address these situations will help to provide:
- guidance to your team who conduct VOI's so youhave a consistent and auditable approach todealing with each individual scenario, and
- a confident objective supported by best availableevidence to safeguard your firm should any fraudclaims arise.
When considering your firm's policy you should turn your mind to the most prudent and practical steps you can take in the individual circumstances to be confidently assured of your client's identity.
Here are some things to consider:
- What is your risk tolerance?
- Will you always aim for safe harbour where possible?
- Who will be permitted to conduct a VOI?
- How will you securely retain your VOI evidence?
- How will you deal with minor anomalies that arise?
Below are examples of common scenarios for consideration in documenting a VOI policy for your firm:
If you depart from the VOI Standard and a fraud claim arises you will have to prove the steps you took were reasonable. This may include demonstrating why the Standard was not practically achievable in the individual circumstances. It will take legal test cases to conclusively answer what "reasonable steps" are across a variety of situations. Being caught up in a VOI test case is no place to find your firm.
If you have any questions about how ZipID can help you with safe and sound VOI best practice please get in touch