Protect Your Business with Safe Signatures



Regarding large bureaucracies, Mother Theresa once said, “So many signatures for such a small heart.” The same could be said for the U.S. banks embroiled in the foreclosure scandal. Haven’t they learned anything from the economy’s meltdown?

Obviously, they haven’t learned that using so-called “robo-signers” to process foreclosure documents isn’t only wrong, but illegal. Do bank leaders actually believe mortgage clerks can sign 10,000 foreclosure files a month (or one per minute) and still give each file a proper review? Even if the clerks were doing their due diligence, one wonders whether they knew what to look for.

A foreclosure supervisor with Goldman Sachs admitted in a court deposition that she didn’t know the meaning of terms such as “promissory note,” “lien,” or “defendant.”

We can only conclude that banks are either woefully ignorant in this area or consciously criminal. But just because they’re doing this in banking doesn’t mean professionals in other financial sectors should do the same. In insurance, investments, and financial-advisory worlds, client and advisor signatures on sales forms and disclosure documents remain crucially important. Cutting corners or playing signature games can have serious consequences for all concerned.

Why are signatures so important? According to West’s Encyclopedia of American Law, “a signature is a mark or sign made by an individual on an instrument or document to signify knowledge, approval, acceptance, or obligation.” Its purpose: “to authenticate a writing, or provide notice of its source, and to bind the individual signing the writing by the provisions contained in the document.” Literally, everything aspect of a businessperson’s success hinges on the validity of the signatures they ask their clients to make—and the ones they make themselves.

Sound straightforward, right? Yes, but the Devil is in the pen strokes. Despite the fact that most financial professionals get lots of training in this area, we still hear stories of them signing forms for clients and committing other serious paperwork mistakes. Those who do this run the risk of having their sales rejected, of clients filing complaints, of having their professional licenses pulled, and of getting entangled in errors-and-omissions insurance claims.

Don’t let it happen to you. Here are four key signature guidelines to keep you and your business safe:

  1. Never sign a document as a witness unless you actually saw the client sign the document.
  2. Never sign a form on behalf of another person, even if the person asks you to.
  3. Never ask or require a client to sign a blank or incomplete sales document or other form for you to fill in later.
  4. Never omit dates from forms and then later insert a pre- or post-date.

Remember, the road to perdition—and to nasty client lawsuits—is paved with bad signatures. Whatever you do, stay off that road! Your errors-and-omissions insurance loss history will thank you for it.

Visit our E&O Headqurters for more tips and insights on how to protect yourself.
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