The Financial Services Authority is putting pressure on financial firms to ensure their computers are Year 2000 compliant.
Chairman Howard Davies told a regulation conference in London last week that firms must be Year 2000 compliant by the end of next year. In the spring, the FSA will take over the regulation of all firms currently supervised by bodies such as the PIA.
IT experts believe that computer systems could crash in 2000 because they have not been programmed to deal with the change of date. Many firms have yet to set up programs to solve the problem.
Davies says he will intervene when firms fail to resolve the problem. It is the first time that the Year 2000 problem has been made a regulatory issue.
Davies fears that failure by firms to prepare adequately for the new millennium could leave consumers unable to access their money and involve non-completion of deals, market disruption, loss of records and business failure.
He says: "Every financial firm should have completed its remedial action and tested its systems by the end of 1998. This will be one of our highest-priority issues next year."
The FSA's risk-based approach is designed to ensure that the industry operates as normal despite the change of date.