01 April 1999

TWELVE OF THE UK’s LARGEST financial groups - 'household names' and 'very well known firms' - have been threatened with closure by the Financial Services Authority because of their failure to deal adequately with the millennium bug.

The FSA, believes the dilatory dozen - most of them direct advertisers - 'pose a serious risk ... to retail customers or the markets'. Each has received letter from the watchdog, warning: 'In the last resort and where it is apparent that there is no better way to protect depositors, investors, policy-holders, or the integrity of markets, we will take action to restrict a firm’s business or in extreme cases to remove its authorisation altogether.'

Innocents, such as you or I, dear reader, might think that a warning of such severity would galvanise even the City to action. Not so. The FSA has yet to receive a single reply to its request for proof that the twelve are Y2K-compliant! The offenders include retail and investment banks, insurance companies and building societies - none of which the FSA would name for 'legal reasons'.

The regulator also warned that no organisation under its control has yet qualified for its 'green' category, certifying 100% Y2K compliance. The British Bankers Association, representing the retail banks, denied that its members had any such problems, although Barclays Bank conceded that its systems were only 90% compliant but would be 100% so by the summer.