It is hard to imagine how it could be defined rigorously without excluding legitimate activities, and by its very nature it could be carried on from locations outside the reach of UK law. Even if it was illegal criminals would still be able to do it. Widespread use of digital signatures will remove most of the problem anyway. These problems are best dealt with by a strong market, with many providers offering differentiated services which customers are free to choose from. The less legislation the better.
Internet users can, already, choose their level of exposure to the Net.
Development of these services is best left to the market. It is still entirely unclear which intermediary services will be useful or profitable. I find the inclusion of this paragraph hard to understand. Almost all businesses will already have made their own arrangements which are unlikely to involve KRAs except in very unusual circumstances. I dont see that there is any reason for government to encourage providers to make these products available.