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FSA to act on 2000 bug

The Financial Services Authority could stop IFAs and life offices from trading if they do not make computer systems Year 2000 compliant.

The FSA is concerned that many companies are failing to update their computers to deal with the change of date from 1999 to 2000.

It will clamp down to protect investors, depositors and policyholders from losses caused by inadequate preparation.

The warning came last week from FSA managing director and head of financial supervision Michael Foot at a London conference on best practice for financial institutions. He warned that the regulator would not be able to solve IT problems and it was up to individual companies.

Foot said: "The buck must stop with the boards, the chief executives, top management generally and those running small organisations. This is not a technical issue. It goes to the heart of being able to go on doing business."

The FSA will demand firms give it regular reports on their progress to being Year 2000- compliant. If a firm&#39s progress is not up to scratch, the FSA will send in an independent body to assess the situation. It could then ban the firm from taking any new business or trading at all. It could also force it to transfer all business to another company.

The move comes just weeks after the PIA announced it was launching its own plan to pressure member firms into speeding up their Year 2000 reviews.

The IFA Association has also launched a major review into the impact of the problem on its members.


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