Regarding large bureaucracies, Mother Teresa 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 since 2008′s financial cataclysm?

Obviously, they haven’t learned that using so-called robo-signers to process foreclosure documents isn’t only wrong but illegal. I mean, 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–funny how that name keeps popping up–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 we should do the same in insurance.

In our world, client and advisor signatures on application forms and disclosure documents remain crucial. 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 you do in financial services hinges on the validity of the signatures you ask your clients to make–and the ones you make yourself.

Sounds straightforward, right? Yes, but the devil is in the pen strokes. Despite the fact that most agents get lots of training in this area, I still hear stories of advisors signing forms for clients and committing other serious mistakes. Agents who do this run the risk of having their applications kicked back, of clients filing complaints or suing them or of having their licenses pulled.

Don’t let it happen to you. Here are a few key signature guidelines to keep you safe:

  1. Never sign an application 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 application or other form for you to fill in later.
  4. Never omit dates from forms then later insert a pre- or post-date.