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There must be a password recovery process or people like my mum with dementia are screwed. Presumably there is also a process for getting a new one when your house has burnt down and so you need the replacement sent to your temporary accommodation. In this case the property was empty for a while so perhaps ideal for getting replacement documents sent to the address on file anyway.
Basically ID is really hard and magic cards don't help a lot. You need to establish a chain of trust via reputable people. Eg you give the conveyancer a list of references that know you personally and they actually follow then up. The referees need to be established people with a significant paper chain of their own and lots to lose if they lie. Would be awkward for day to day life but seems reasonable when selling property.
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As someone who worked on the closest thing the UK government has to digital ID, it is indeed very very hard. The tech is hard, keeping it secure is very hard, the government data is terrible, commercial sources of identity are awful and doing it in a way that users understand and can use is almost impossible.
If it's complicated it's exploitable and if it's simple it doesn't work. We spent tens of millions and it basically went nowhere.
But you'd also need to know the password (user chosen) to cancel the first one and hope that the actual owner doesn't need his or her NemID for a few days and physically break into a letter box on the correct day of delivery afterwards. Sounds a bit more than just a driving license, no?