Released 16 November 2021
The Financial Conduct Authority (FCA) has confirmed rules for temporary use of synthetic sterling and yen LIBOR rates in all legacy contracts, other than cleared derivatives, that have not been changed at or ahead of 31 December 2021.
The FCA states that these synthetic rates will not be available for use in any new contracts and lenders who are replacing LIBOR with an alternative rate in their contracts, especially those related to mortgages, are advised to treat their customers fairly. Communication with borrowers should be made in good time to ensure they are able to consider all options in advance of LIBOR becoming unavailable.
Although 5 US dollar LIBOR settings will continue to be calculated by panel bank submission until the end of June 2023, the FCA has confirmed that the use of US dollar LIBOR will not be allowed in most contracts written after 31 December 2021.
Further information can be found at https://www.fca.org.uk/news/press-releases/fca-confirms-rules-legacy-use-synthetic-libor-no-new-use-us-dollar-libor.