Conduct risk during LIBOR transition: Questions and answers

LIBOR will end after 2021. We expect firms to take appropriate steps to ensure they can transition to alternative rates ahead of end-2021.

During discussions with industry, including the Working Group on Sterling Risk-Free Rates (RFR Working Group), firms have asked about our core expectations of firms during the transition away from LIBOR. In response, we have answered key questions on conduct risk arising from LIBOR transition, outlining our expectation that:

  • firms have a strategy in place and take necessary action during LIBOR transition
  • customers are treated fairly by following our rules and guidance

FCA supervision of firms’ transition away from LIBOR is focused on firms effectively managing the risks arising from transition, including prudential, operational and conduct risks.

We encourage all firms that currently rely on LIBOR to read and consider these questions and answers. They are not exhaustive. They do apply to firms across various sectors. We have used sector-specific examples where relevant but firms will need to exercise judgement on the impact of LIBOR transition across their business, taking the interests of specific clients and the nature of the firm’s business model into account.

We welcome feedback from firms across all sectors as we consider how best to support firms during this process.