Millennium Compliance

Oral Answers to Questions — Treasury – in the House of Commons at 12:00 am on 15th April 1999.

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Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Treasury) (EMU and the City) 12:00 am, 15th April 1999

If he will make a statement on the Government's contingency plans in respect of a failure of systems at the new millennium in major financial institutions. [79447]

Photo of Mrs Barbara Roche Mrs Barbara Roche Financial Secretary, HM Treasury

The Treasury has a wide range of contacts with both the Financial Services Authority and the Bank of England on the year 2000 issue. The FSA regards the issue as a major supervisory priority and has made it clear that firms that fail to implement appropriate measures face regulatory intervention. The memorandum of understanding between the Treasury, the Bank of England and the FSA sets out the role of each institution in the field of financial stability, including where there are exceptional circumstances.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Treasury) (EMU and the City)

Why did the Minister not mention in her reply the recent report of the FSA's director of supervision—which suggested that a significant number of high-impact financial institutions are so negligent that they have not even started to make preparations for millennium compliance and may well be required to close their doors in the new year, with incalculable consequence for individuals and small businesses? Will she explain more precisely what the Government, in addition to the FSA, plan to do to prevent that disaster from occurring?

Photo of Mrs Barbara Roche Mrs Barbara Roche Financial Secretary, HM Treasury

The Government are working closely with the FSA, and daily meetings are taking place. It is well acknowledged that UK financial institutions are perhaps the leading institutions in terms of year 2000 compliance. The hon. Gentleman mentioned the statement about those firms. Those figures were for the end of 1998. The authority has challenged those firms that appear to be less ready than others either to show that the assessment was out of date or rapidly to produce a plan for remedial action. Updated figures will be produced next week.