On 28 October 2020, UK Finance and the Lending Standards Board launched a report covering ‘Best Practice Guidance in Transition from LIBOR for SME customers’. The objectives of the report are to support the transition from LIBOR to alternative reference rates, champion good outcomes for business customers, and collectively promote good practice throughout the process.

The purpose of the report is to make strategic recommendations to firms on good practice for the transition of SME business customers to non-LIBOR linked products with the aim of facilitating good customer outcomes and enhancing consistency of approach across the financial services industry, taking account of the principles set by the Standards of Lending Practice for business customers (the Standards).

The focus of the report is limited to products covered by the Standards (loans, overdrafts, commercial mortgages, credit cards and charge cards). In the UK market, only loans and commercial mortgages are likely to be impacted by the LIBOR transition although not all such products will be impacted as many loans and commercial mortgages reference rates other than LIBOR. References to loans in the report should be taken to refer to bilateral loans. The implications of LIBOR transition for syndicated lending have been extensively addressed by other bodies, including the Loan Markets Association. However, lenders may wish to consider how the good practices described in this report might impact on, or be adapted for, other products, even where those products are not explicitly within the scope of this report.