This week on the LIBORcast, Dechert’s series on all things related to the LIBOR transition, our very own Sarah Smith and Karen Stretch interviewed Helen Boyd and Nick Miller from the U.K.’s Financial Conduct Authority (the “FCA”).

The FCA, as supervisor of the LIBOR administrator IBA, has the ability to declare LIBOR unrepresentative which will activate LIBOR fallbacks  under both the ARRC recommended LIBOR fallback language and the forthcoming ISDA protocol.

Among other things, Ms. Boyd and Mr. Miller discuss the new powers that the U.K. government announced will be granted to the FCA, including the ability to create a LIBOR replacement for use in tough legacy contracts (i.e. those contracts that genuinely have no or inappropriate alternatives and no realistic ability to be renegotiated or amended). Officials from the FCA have been clear that these enhanced powers are not a substitute for active transition and are only to be used where there is an insurmountable problem with transition.

The overriding message from the FCA is unequivocal – it is absolutely imperative that firms take positive action now to manage and mitigate the range of risks that LIBOR transition presents. Be sure to check out the interview and read more here!