Watchdog Warns Y2K Bank Problemsgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
What does it mean that 36% will catch up? When? How many shortcuts? Can you imagine what worried faces liik like?
There will have been some worried faces in the boardrooms of the major British banks this morning after the Financial Services Agency (FSA), the government watchdog on the UK's financial community, issued a stern warning over the weekend about the Y2K status of a major London- based bank.
Late on Friday, after close of trading, the FSA issued a press release stating that a major bank had had its knuckles wrapped over its failure to tackle the Y2K issue effectively.
According to FSA, which has refused to name the bank, other than to say it is a major London-based financial operation, steps are expected in the coming weeks to solve the problem. If unchecked, then the bank's computer system could hit problems at the end of the year.
According to Michael Foot, the head of the FSA, the major "household name" bank is not alone in its Y2K inefficiencies, as several small financial services companies are also under the spotlight.
The big question for many people in the UK over the weekend was which bank was having the Y2K problems. Newsbytes notes that, of the five high street banks in the UK - Barclays, Midland, Lloyds-TSB, Natwest, and the Royal Bank of Scotland - Midland is not London-headquartered, while the Royal Bank is Scottish-based.
This just leaves Barclays, Lloyds-TSB and Natwest. LLoyds-TSB has just announced that the merger of Lloyds and TSB is now complete and effective from today. The bank also says that its computer systems are also operating as one for the first time, suggesting that Y2K non- compliance is unlikely.
This narrows the field down to Barclays and Natwest as the highest possibilities in the FSA "at risk" category.
According to FSA, eight UK financial services companies are now in its "high risk" category, as compared to 32 two months ago.
Speaking at a major conference in London on June 25, Foot, the managing director and head of financial supervision at the FSA, said that the next stage is for the industry to press ahead with the development of robust business continuity plans to ensure effective management of any Y2K disruption that does arise.
"I'm pleased to say that I can report further improvement in the sector, particularly among the medium impact groups. Our most recent assessment, this month, shows that 65 percent of high impact groups are on track, 34 percent are behind but expected to catch up, and 1 percent (that is one group) is at serious risk," he said.
According to Foot, of the medium impact groups, 61 percent are on track, 36 percent are behind but expected to catch up, and 3 percent (seven groups) are at serious risk.
"So, out of more than 400 high and medium impact groups, only eight are currently at serious risk," he said.
Foot went on to say that it is very important for any company with a computer system to establish a business continuity plan for Y2K issues.
"What will happen is, as we all know, unpredictable. So it really is imperative that firms understand from the top down the kind of risks that they may face and have thought through, and tested, the arrangements for managing those risks effectively," he said, adding that revised guidance for supervisors on Y2K issues has now been posted on the FSA's Web site.
"It's important to note that preparing to deal with problems if they arise is not the same as expecting problems to arise. To plan for problems gives greater reassurance of continuity, and business as usual. It is not a sign of pessimism or lack of confidence," he said.
According to Foot, the next few months are critical in terms of financial institutions solving their Y2K problems. "We see the next couple of months as crucial - for the most at-risk firms time is very short indeed," he noted.
Newsbytes' sources suggest that the FSA may get very angry indeed with any UK financial services institutions that have not updated their computer systems for the Y2K problem by September of this year. The FSA may then "name and shame" the companies publicly, as has been done in adverts from the British government Y2K body.
According to Foot, the FSA will make another assessment of UK financial services companies that are at risk in July.
"For any remaining Reds (serious risk) or Ambers (behind but expected to catch up), we will then critically examine on a case-by-case basis the prospects for a firm of reducing the risk to consumers or markets to acceptable levels on a reasonable timescale. Particularly for firms still at Red, time is very short indeed," he said.
The FSA's Web site is at http://www.fsa.gov.uk .
-- y2k dave (firstname.lastname@example.org), July 03, 1999
It has been widely believed that the financial INDUSTRY started earliest, definitely has the money, has the motivation, and so will be ahead of other industries in making Y2K remediation... right?
"Our most recent assessment, this month, shows that 65 percent of high impact groups are on track, 34 percent are behind but expected to catch up, and 1 percent (that is one group) is at serious risk," he said.
"According to Foot, of the medium impact groups, 61 percent are on track, 36 percent are behind but expected to catch up, and 3 percent (seven groups) are at serious risk.
"So, out of more than 400 high and medium impact groups, only eight are currently at serious risk," he said."
On track huh? "On track" doesn't sound to me like they have arrived at the station, took a taxi to the hotel, have unpacked their bags and are relaxing by the pool with a margarita. Sounds to me like they are still "working real hard" and expect to be done "real soon now".
And that was the 61 - 65% of the high and medium impact group that are "on track". 34% - 39% are BEHIND or at SERIOUS RISK. ??? Uh... HELLO!! This is July 1999! Anyone not DONE is behind (including those who are nominally "on track"). And this is in the industry that is doing the best? In one of the countries that is doing the best? The industry that goes totally down the toilet if we lose confidence in them?
Time for ANOTHER trip to COSTCO/SAMS/WALLMART [and my gold/coin dealer].
-- Linda (email@example.com), July 03, 1999.
Here's some more good news: BANK FOR INTERNATIONAL SETTLEMENTS July 1st Press release
....significant progress on readiness being made in financial markets (not done yet)... ongoing work towards the development of appropriate risk mitigation (not done yet) .... the meeting also indicated that much work is still to be accomplished (no problemo.. plenty of time left) .... need to remain focused in our efforts and avoid complacency (buy MORE rice and beans) .... However, participation in S.W.I.F.T.'s mandatory test programme, while increasing, remains relatively low.(unclear on the meaning of mandatory I guess... also on the meaning of compliant I'll bet).... Given the criticality of uninterrupted transmission of S.W.I.F.T. messages, the Council urges national supervisors to consider incorporating reviews of whether market participants have successfully tested with S.W.I.F.T. into their supervisory programme. (no... duh!)
"Given that the efficient functioning of the financial markets relies heavily on public confidence, financial authorities and market participants should continue to take steps to enhance information sharing in their markets and to encourage the media to fulfil their special obligation to engage in balanced and accurate reporting." (like slapping down the KIA and Poloroid ads?)
-- Linda (firstname.lastname@example.org), July 03, 1999.