Financial services and Year 2000: Further improvement

66% of High and Medium Impact financial groups are assessed by the Financial Services Authority (FSA) as either having effectively completed their Year 2000 programmes (Green) or being on track for completion (Blue). 32% are behind but are expected to be able to catch up in time. 2% (8 groups) continue to present material risk and are the subject of intensive supervision.

Michael Foot, Managing Director and Head of Financial Supervision at the FSA, said:

"Since my last report on 25 June there has been further progress by the financial sector towards Year 2000 readiness. We are keeping up intensive supervision of those firms who are behind in their preparations. As I have said repeatedly, we would not hesitate to take action in order to protect the interest of depositors, policy-holders and investors. And the time for tough decision is approaching. The next couple of months are crucial for the laggards. We will make another assessment during July (taking into account the end-June self-assessment which High and Medium Impact firms will have to complete). For any remaining Reds and Ambers we will then critically examine on a case-by-case basis the prospects for a firm reducing the risk to consumers or markets to acceptable levels on a reasonable timescale without regulatory action. When and where needed, regulatory action will follow."

Notes for editors

There are about 450 financial groups in the High and Medium Impact categories.

According to todays assessment: 6% of these are rated as Green - "done" all reasonable steps taken 60% as blue - "on track" 32% as Amber - "behind but expected to catch up" 2% (eight groups) as red - "serious risk of material disruption" The previous assessment published on 25 June stated: 63% Green/Blue 35% Amber 2% (eight groups) Red The FSAs assessment of firms'' Year 2000 preparedness is based on regular reports of their progress in remedying business critical systems and in preparing effective business continuity plans. The primary responsibility for achieving Year 2000 compliance and effective business continuity rests with financial institutions themselves. Year 2000 is a regulatory issue because of its impact on depositor, investor and policy-holder protection; on prudential soundness of financial institutions; and market integrity. Promoting Year 2000 preparedness is a major FSA supervisory priority. The FSA has a dedicated Year 2000 section on its web-site, which includes Publications, Speeches, Press Notices, and Guidance for supervisors and links to other Year 2000 sites. (www.fsa.gov.uk) The Action 2000 Forum brought together reports from the UKs 25 main National Infrastructure sectors including power, transport, emergency services and local authorities. (www.bug2000.co.uk)