On 29 April 2020, the FCA issued a further statement on LIBOR reform referring to the joint statement that was made on 25 March that it remains the central assumption that firms cannot rely on LIBOR being published after the end of 2021.

The FCA states that it recognises the challenges presented by the current operating environment and is pleased to see continued progress on LIBOR transition through this difficult period.

The FCA and the Bank of England have worked with members of the Working Group on Sterling Risk-Free Reference Rates (RFRWG) and its sub-groups and task forces to consider how all firms’ LIBOR transition plans may be impacted by the COVID-19 pandemic and taking this into consideration the RFRWG recommends that:

  • by the end of Q3 2020 lenders should be in a position to offer non-LIBOR linked products to their customers;
  • after the end of Q3 2020 lenders, working with their borrowers, should include clear contractual arrangements in all new and re-financed LIBOR-referencing loan products to facilitate conversion ahead of end-2021, through pre-agreed conversion terms or an agreed process for renegotiation, to SONIA or other alternatives; and
  • all new issuance of sterling LIBOR-referencing loan products that expire after the end of 2021 should cease by the end of Q1 2021.

The RFRWG agreed that progress can also continue to be made in other areas. This includes:

  • publishing the RFRWG’s analysis on, and considerations for, dealing with ‘tough legacy’ contracts;
  • building on the strong consensus on how to calculate a fair credit spread adjustment in legacy cash products to assist transition from LIBOR in cash markets; and
  • when plans and working arrangements disrupted by the COVID-19 pandemic begin to stabilise, the RFRWG and its members will intensify communication with customers needing to move away from LIBOR as part of transition.