District Circular Letters

• District Circular Letters Index

June 2, 1998

BANKING SUPERVISION AND REGULATION:
FFIEC GUIDANCE ON YEAR 2000
CONTINGENCY PLANNING
AND CUSTOMER AWARENESS PROGRAMS

To State Member Banks, Bank
Holding Companies, Edge Act Corporations,
U.S. Branches and Agencies of Foreign Banks,
and Others Concerned
in the Twelfth Federal Reserve District

Interagency Guidances Regarding Year 2000 Readiness

The Federal Financial Institutions Examination Council (FFIEC) has issued the seventh and eighth in a series of policy statements addressing safety and soundness issues pertaining to the Year 2000. The two papers address the need for financial institutions to develop contingency plans to mitigate risks due to the Year 2000 date change, and to be prepared to respond to customer inquiries on Year 2000 matters. The Federal Reserve Bank of San Francisco is pleased to provide these publications for your information.

Contingency Planning

The advisory entitled "Guidance Concerning Contingency Planning in Connection with Year 2000 Readiness" provides that the board of directors and senior management of each financial institution should place a high priority on developing, validating, and implementing Year 2000 contingency plans assuring that an institution's mission-critical functions will continue if one or more systems fail. The contingency planning process should take into account the impact of external systems, including service providers, other financial institutions, customers, and infrastructure providers.

Customer Awareness

The advisory entitled "Guidance on Year 2000 Customer Awareness Programs" outlines some of the issues financial institutions should consider when developing customer awareness programs as the century date change approaches. The advisory highlights some of the issues customers are most likely to raise and recommends that financial institutions

• consider the types of customers with whom they will have to communicate in order to best prepare for these customers' particular concerns;
• develop effective methods of responding to inquiries; and
• ensure that personnel who interact regularly with customers are trained to respond appropriately to inquiries or refer customers to explanatory materials.

Consumer Brochure Available

FFIEC has developed a brochure providing information to consumers about the Year 2000 challenge. The brochure explains the steps depository institutions and the federal banking regulators are taking to address the century date change, and emphasizes that the Year 2000 challenge will not affect deposit insurance coverage. The brochure will become available in the coming months. Each depository institution will be sent a copy of the brochure when printing has been completed.

Additional Information

For additional information regarding the enclosed FFIEC guidances or Federal Reserve's Year 2000 bank supervision program, please contact Mr. Robert Johnson, Assistant Vice President, Banking Supervision and Regulation, at (213) 683-2738. If you have questions about the Federal Reserve System's Century Date Change Project, please contact your local Business Development office, as listed below:

Attachments

FEDERAL RESERVE BANK OF SAN FRANCISCO