On 26 March 2021, the PRA and FCA (together the regulators) published a joint Dear CEO letter on the transition from LIBOR to Risk Free Rates.

Key points in the Dear CEO letter include:

• The regulators expect all firms to meet the milestones of the Working Group on Sterling Risk Free Reference Rates and the targets of other working groups and relevant supervisory authorities as appropriate. The annex to the Dear CEO letter sets out a list of priority areas where further action by firms is necessary to prepare for the cessation of LIBOR.
• The regulators have written separately to the named senior management function holder responsible for oversight of transition at the PRA and FCA firms with the largest and most complex LIBOR exposures to outline the steps expected of them.
• The regulators are intensifying their supervisory focus on firms’ management and oversight of the risks associated with LIBOR transition.
• The regulators are keeping a range of supervisory tools under review for use where they see insufficient progress, or incidents of poor risk management or governance of transition, including relative to the expectations set out in the Dear CEO letter.