The PRA and the FCA have published a number of observations across eight key areas linked to the transition from LIBOR to alternative interest rate benchmarks.

In September 2018, the FCA and the PRA wrote to CEOs of major banks and insurers supervised in the UK asking for details of the preparations and actions they are taking to manage this change. The purpose of these letters was to seek assurance that firms’ senior managers and relevant governance committee (s) understand the risks associated with this transition and are taking appropriate action now so that firms have transitioned to alternative rates by the end of 2021.

Observations have been detailed around the comprehensive identification of reliance and use of LIBOR, quantification of LIBOR exposures, granularity of transition plans and their governance, identification and management of prudential risks associated with the transition, identification and management of conduct risks associated with the transition, scenario planning, the role of market participant in supporting transition and transacting using new risk free rates and building in fallbacks.

To read the findings click here.

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