UK Government Mulls New Legislation To Protect Finance Centre

by Robin Pilgrim, LawAndTax-News.com, London

28 February 2003

The UK Treasury Department this week published a green paper entitled 'The financial system and major operational disruption', in which it proposed legislation to help the country's financial services sector deal with eventualities such as a terrorist attack or devastating computer virus.

The proposals were mainly designed to address the protection of the CHAPS and BACS payment and settlement systems, allowing for a temporary suspension of the legal obligations of financial institutions to settle contracts.

'A payment system is the most basic and fundamental kind of financial infrastructure - without the transfer of money operating effectively few parts of the financial system will work well,' the government green paper explained, adding that in the event of a terrorist attack such as that experienced by the United States in 2001, financial service providers would be able to: 'focus on restoration of operational networks in preparation for resumption of normal business, with less preoccupation with short-term financial pressures.'

In the event of a computer virus attack on banks, according to the Treasury's proposals, banks would be obliged to stop direct debits from the accounts of retail customers, (such as staff payments from businesses) until the virus had been brought under control and the banks' computer systems were once again able to process salary payments.

Recommended