VOI rule changes postponed due to COVID

Following feedback from industry, an amendment was put forward in March that would have required brokers and lenders to first apply the Verification of Identity (VOI) Standard, which requires a face-to-face in-person interview. Previously, the standard gave users the option of applying the standard or taking reasonable steps to verify the identity of the borrower.

This change, taking effect from 3 August 2020 would require the identity verifier and the person being identified to both be physically present at the interview as a first port of call. 

The amended rule did outline, however, that “if reasonably satisfied that the Verification of Identity Standard cannot be applied”, then they could “verify the identity of a person in some other way that constitutes the taking of reasonable steps”. 

ARNECC specified in March that “use of video technology” with the borrower would constitute reasonable steps in this instance, but added that evidence of the video call must be retained and a justification of how this constitutes reasonable steps would need to be included.

However, ARNECC has now acknowledged that since the amendments were released, “the world has changed significantly with the escalation of the coronavirus pandemic and resultant restrictions imposed”.

Noting that it is “unknown how long the consequential and disruptive impact on all businesses” and the changes that have been required to methods of operation will last, it has “reassessed” its proposed amendments as well as the implementation timeline for the rule changes.

As such, ARNECC has now advised that the proposed amendment to the VOI regime requiring brokers and lenders to first apply the VOI standard prior to utilising reasonable steps will no longer form part of the updated rules, nor will the 3 August 2020 implementation date apply.

“It is now unlikely that a take-effect date will be implemented in 2020. Once a pathway out of the pandemic situation is clear and the feedback has been fully evaluated, ARNECC will be able to advise an updated implementation timeline,” the body stated.

The move has been welcomed by industry, which has been closely following how the legal frameworks around remote VOI apply, given the social distancing requirements in place. 

MSA National, a national law company that provides mortgage documentation and settlement services to funders, mortgage managers and originators – including a remote VOI tool IDyou – welcomed the change.

MSA National’s CEO, Ayhan Baba, commented: “The lives of brokers and lenders across the country are set to become easier as remote verification of identity by video conferencing is preserved by ARNECC indefinitely. 

“...ARNECC announced that home loan lenders will retain the choice of conducting VOI in person or remotely taking reasonable steps to verify the identity of a borrower.”

Mr Baba added that MSA’s remote VOI mobile app, IDyou, has built-in video call functionality designed specifically for mortgage brokers to help meet the reasonable steps standard set by ARNECC, and also produces a report evidencing the video call and copies of the IDs.

“MSA National welcome’s the decision by ARNECC as one that supports the industry during what is a challenging time for brokers and customers,” Mr Baba concluded.

With the federal government ordering self-isolation or quarantine for those affected by COVID-19 – and encouraging social distancing among the general public – many lenders announced measures to enable brokers to conduct virtual meetings with clients, as well as undertake remote VOI checks.

However, several lenders have also said that these remote VOI requirements would only be brought in temporarily and most likely revert following lockdown. This is largely believed to be due to differing interpretations of the ID laws and the “reasonable steps” test.

It is hoped that this update from ARNECC will provide greater clarity to industry.

[Related: We need to tackle VOI standardisation: Connective]