Client Identity Verification (CIV) Standard for Electronic Conveyancing

National E-Conveyancing (NECs) is progressing towards reality, although implementation is still a few years away. NECS is a national system under which lodgement of land dealings occurs electronically (like the PPS regime). Lenders are requested to give us feedback on these proposals ASAP to allow feedback to the working party.

Example: An individual authorises its lender or lawyer to register a transfer or mortgage. This comprises two steps:

• the lender/lawyer identifying the individual – this is called 'client identity verification' – CIV;
• the individual authorising the lender/lawyer to create the dealing (eg mortgage or transfer) on the land titles registry.

To reduce the risk of fraudulent dealings being lodged on the register, proper identification of individuals wanting to deal with their land is of critical importance. However, the necessity for face to face meetings to make the identification has the potential to create a bias against brokers and lenders without large branch networks. Even customers of banks with large branch networks may be inconvenienced by the need to visit a branch in person for identification.

National E-Conveyancing Development Ltd (NECDL – the company set up to establish and run NECS) recently issued a stakeholder consultation proposal for identity verification. The proposal contemplates that all of the following three steps will be required to identify an individual:

1. Identity documents production – production of specified documents (eg drivers licence), some of them with a picture of the applicant;
2. Visual identity verification – face to face matching of the person's facial features to the photograph(s) included on one or more of the identity documents;

3. Electronic document verification – electronic matching of the details contained on some of the identity documents with the issuing agencies' records through the Commonwealth Government's Document Verification Service (DVS).

As noted above, the requirement for face to face verification poses an issue for lenders and brokers without a big branch network, and even poses challenges for those with many branches.

There has been some suggestion that brokers could be allowed to effect the face to face verification for lenders (in the same way as many brokers conduct AML/CTF identification for lenders). However, the proposal contains the major proviso that these lenders accept liability for the conducts of brokers.

The basis for this suggestion is as follows:

• brokers are now licensed;
• brokers have PI cover;
• lenders will be required to ensure that brokers receive adequate training on verification;
• lenders must carry out regular quality assurance checks.

Another option being considered is to allow Australia Post to verify identity for lenders. Australia Post liability would be covered by NECDL and not the lenders.

Lenders who outsource document preparation would be able to 'pass' the benefit of the identification by brokers or Australian Post to document preparation houses (eg panel lawyers).

NECDL has asked us to obtain feedback on these proposals. If you are a lender would you be prepared to underwrite the performance of brokers? Is Australia Post a workable solution?  If you are a lender or servicer, we would appreciate your feedback promptly which will then be compiled and submitted to NECDL.

For more information, please contact:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.