Watchdog looks out for millennium bug

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The Independent Online
THE NEW financial services watchdog will today warn member firms that failure to prepare for the year 2000 could lead to their licences being revoked.

Michael Foot, recently appointed as head of financial supervision at the Financial Services Authority (FSA), will tell a conference on Best Practice for Financial Institutions that the job of the FSA is to "protect investors from losses caused by inadequate preparation for the year 2000".

However, Mr Foot will add that the FSA is not there to "solve other people's IT problems". He will say: "The buck must stop with the boards, the chief executives, top management generally, and those running small organisations.... Senior executives need to accept and take very seriously their responsibility."

The FSA will require member firms to give it regular reports on their progress towards year 2000 compliance. If a member firm's progress is not up to scratch, the watchdog will, in the first instance, require an independent body to assess the firm's compliance status.

If the problem is serious, the FSA will then take further steps to ensure that neither investors, nor the integrity of the markets, are put at risk. Mr Foot will tell the conference: "If we are satisfied that stronger action is justified to achieve our regulatory objectives ... the FSA has powers available to it, for example to restrict a firm's activity to take on business, to stop doing business altogether or to transfer its business to another firm. "

Mr Foot will also caution firms which believe they are year 2000 compliant against over-confidence. "Such firms should adopt a watching brief and be prepared to revisit their plans."

Nine regulatory bodies - including the banking supervision department at the Bank of England and the Personal Investment Authority - will be integrated into the FSA.