insight | 34 of 34 in series

Aspects of COVID-19 financial services response worth keeping

26 June 2020

The COVID-19 relief allowing affidavits, statutory declarations and oaths to be witnessed electronically should be made permanent as they provide an important flexibility which is worth keeping.

​​We also advocate removing statutory declarations for KiwiSaver withdrawals and replacing them with certifications.

Improvements which should be kept

  • The ability to make oaths and declarations through audio-visual and audio links, such as Zoom and Skype, rather than in person was provided through the Epidemic Preparedness (Oaths and Declarations Act 1957) Immediate Modification Order 2020, which is set to expire on 24 September.
  • The Financial Markets Authority (FMA) announced around the time the Order was passed that it would be comfortable with managers taking a “best alternative steps” approach to verifying the identity of persons giving a statutory declaration in relation to a KiwiSaver withdrawal in circumstances where audio-visual witnessing was not practicable.
  • Parliament amended the electronic transactions rules in Subpart 3 of Part 4 of the Contract and Commercial Law Act 2017 (CCLA) so that they now temporarily apply to deeds that create powers of attorney in connection with certain security interests.

These new options harness the capabilities of widely accessible technologies while preserving the solemnity of oaths and declarations, the need for verification and evidence and the need to ensure the person has actually signed the document and intends to be bound by it.

Our comment

The last review into technology and the law was more than 20 years ago, which led to the Law Commission recommending electronic transactions legislation.

The Law Commission found it was “undesirable that statutes which were designed to meet particular needs in earlier times should operate in a manner which may discourage electronic commerce”, and queried whether legislative requirements that things be done in the presence of a human being or at a physical location, for example affidavits, were still justified.

The Electronic Transactions Act 2002 (since repealed and now Part 4 of the Contract and Commercial Law Act 2017) was enacted in response to the Law Commission’s recommendation.

The Discussion Document leading to the 2002 Act considered it was inappropriate to allow electronic technologies to be used for affidavits and statutory declarations, but provided no rationale for this position beyond noting that it was in line with the practice in other jurisdictions.

But technology has come a long way since then, with applications like Zoom and Skype able to provide the functional equivalent of physical attendance, and now routinely used and accepted by New Zealanders as substitutes for physical contact in their daily interactions (including for conducting Parliamentary business such as Select Committee hearings).

To the extent that there are concerns that the use of audio-visual links could compromise the evidentiary and record-keeping objective of affidavits and statutory declarations, these can be adequately addressed by incorporating in legislation the requirements that were contained in the Immediate Modification Order. These requirements are:

  • the administrator must be satisfied that the person swearing or making the oath or affirmation signed the document concerned in the course of the audio-visual or audio link, and
  • as soon as practicable after signing the document, the person must send the signed document (or a photograph or scan of the signed document) to the administrator for the signature of the administrator.

We consider these measures achieve the purposes of current witnessing processes; the solemnity remains through the authority of the administrator, and the assurances provided by the person swearing would be the same. However, if needed, these requirements could be enhanced by adding a further stipulation that the administrator is reasonably satisfied that the person signing the document is the person named. The AML/CFT laws mean that identity verification is now more commonplace than was the case 20 years ago. Administrators’ electronic record keeping of the audio visual link could also be added to further enhance current protections if electronic witnessing was to be extended.

Further flexibility for KiwiSaver withdrawals requiring statutory declaration?

Omitting the formalities required for a statutory declaration (requiring signing in the presence of certain persons, e.g. lawyers) and requiring a certification (or similar) instead does not detract from the ability to enforce making a false declaration or certification.

In practical terms, the consequences of making a false declaration or making a false certification are substantially the same.

In a “putting the customer first” culture, the customer’s ability to withdraw what is largely “their” money should be made as easy as safely possible – particularly in relation to the withdrawal of government contributions, which may represent only a small portion of a member’s KiwiSaver balance.

Next steps

We have written to Minister Faafoi requesting that he:

  • renew permanently the relief offered by the Immediate Modification Order, which is set to expire on 24 September 2020
  • extend the FMA’s “best alternative steps” approach to ensuring the integrity of declarations, and
  • consider removing the requirement for statutory declarations to be provided before members or their personal representatives can withdraw their government contributions (member tax credits) and, in certain cases, for early withdrawals.

If you consider that these changes would be of benefit to your business and your customers, you may like to prepare a similar letter to the Minister in support of extending this relief, or extending it in the ways we have suggested.

If you would like more information on this or assistance with preparing such a letter of support, please get in touch with one of our contacts.

Quick links

The financial services sector – through COVID-19 Alert Level 3 and beyond

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