The pace of transition to Alternative Reference Rates (ARRs) has ramped up significantly in recent weeks. Firms are pivoting from initiation and planning to execution, while international regulators continue to reinforce the message that the time to act is now.

The Bank of England (BoE) and the Financial Conduct Authority (FCA) made this clear in a recent ‘Dear SMF‘ letter, where they specified that firms should aim to cease issuance of sterling LIBOR-based cash products maturing beyond 2021 by end-Q3 2020; and significantly reduce the stock of LIBOR referencing contracts by Q1 2021.

International regulators are echoing this sense of urgency. In its December 2019 progress report, the Financial Stability Board (FSB) called for significant commitment and sustained effort across jurisdictions. In the U.S., the roster of regulators raising preparedness for LIBOR transition continues to grow with the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) joining the ranks of the Office of the Comptroller of the Currency (OCC), the Commodity Futures Trading Commission (CFTC) and the New York Department of Financial Services (NYDFS).

As LIBOR transition gains momentum across workstreams, so should financial institutions’ exposure to associated risks. Conduct Risk is perhaps the most topical of these, and unsurprisingly so, since mitigating misconduct (such as rate rigging) was a key catalyst for moving the $370 trillion market away from LIBOR.

As with other risks associated with the LIBOR transition (such as regulatory, commercial and operational risk), conduct risk primarily stems from a triad of drivers (see below).


  • Exposure to IBORs – What is the extent of a firm’s exposure to rates that are at risk of cessation (or will not be permitted for use)?  
  • Counterparty – What are the characteristics of the counterparty that might impact conduct risk (i.e. sophistication) 
  • Products – What are the key features of the product such as complexity, maturity, and contractual/fallback provisions?


  • Misleading clients by means of client communications regarding the ongoing suitability of IBORs 
  • Negative client outcomes and conflicts of interest driven by the economic inequivalence of IBORs and the ARRs 
  • Anti-competitive practices in Risk-Free Rate (RFR) or industry working groups  
  • Market abuse or seeking unfair advantage using information not publicly available

Source: Parker Fitzgerald, part of Accenture, February 2020 

UK regulators made clear in their Dear SMF letter on Next Steps for LIBOR Transition that they will step up engagement with firms through supervisory visits, reviewing management information and by collecting data to assess progress. It is likely regulators shall use Conduct both as a lever to accelerate transition – and a focus lens through which to scrutinize firms’ efforts.

Firms in the U.S., however, face different regulatory challenges when it comes to LIBOR conduct risks. The U.S. doesn’t have a conduct regime, like the Senior Managers and Certification Regime (SMCR) of the FCA. Instead, there are a myriad of regulations protecting certain actions and certain clients and customer groups. It is therefore harder to set standards and expectations – and firms face greater uncertainty over evidencing and demonstrating that they did all they could.

The “tale of two Cities” in conduct regime adds to the complexity for global firms operating across major financial centres. This also adds to the importance that firms embed a proactive approach to identifying, tracking and mitigating conduct risk so they can satisfy supervisors and demonstrate that they are discharging their various duties to clients, in accordance with regulations such as the SMCR and International Organization of Securities Commission (IOSCO). For additional context see ‘Progress and challenges’ 5 Conduct Questions and Statement on Matters to Consider in the Use of Financial Benchmarks.

As a matter of priority, firms should be aggregating, interrogating, and where possible automating sensible management information (MI) to inform program planning and prioritization; provide to supervisors1 in supervisory meetings and regulatory reporting; report to senior managers and the board; and respond promptly to emerging risks.

Increasingly firms are leveraging technology to enhance MI reporting. Specific use cases include dynamic command and control MI dashboards which link firms’ IBOR exposures to contractual fallback language. Firms can further integrate appropriate conduct risk indicators capable of highlighting dynamic risks across programs to inform business decisions while meeting reporting obligations of regulatory authorities. Notably, this MI is highly relevant for all key IBOR transition risks; not just conduct.

Effective MI reporting aside, market leaders are also harnessing technology automation to reduce the burden of scrutinizing in-scope contracts. For example, artificial Intelligence (AI) can efficiently classify and suggest appendments for large volumes of contracts; reconcile contracts against position/risk systems; create dedicated workflows; and create an auditable record of the complete remediation lifecycle evidencing the steps taken to manage conduct risks.

As the financial services industry steps up its LIBOR transition activities in the year ahead, firms should operate their conduct and compliance workstreams in lock step with the mobilization and execution of their transition plan. To safeguard the financial system from the complex risk landscape of LIBOR transition, smart firms should look to smart solutions to manage this mammoth undertaking.


  1. Start communication early with clients.
  2. Take a 360 view of the client, to balance the desired outcome for the relationship with the individual products.
  3. Keep things consistent.
  4. Align communications internally and externally.
  5. Keep good records and provide adequate controls and data.

Source: Accenture, February 2020  

For more information, view our diagram: Conduct Risk Along the LIBOR Journey

Visit our LIBOR offering page to learn how our solutions can help you transition from LIBOR with confidence. 



  1. The Financial Conduct Authority and the Prudential Regulation Authority are running a series of joint supervisory meetings for the purpose of reviewing financial firms transition plans and mitigation of key risks series.  

Newsletter Author: Samantha Regan and Gerard Jacob

Newsletter Contact Person: Kuangyi Wei 


This blog is intended for general informational purposes only, does not take into account the reader’s specific circumstances, may not reflect the most current developments, and is not intended to provide advice on specific circumstances. Accenture disclaims, to the fullest extent permitted by applicable law, all liability for the accuracy and completeness of the information in this blog and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professional. 

About Accenture 

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Accenture, its logo, and New Applied Now are trademarks of Accenture. This document is produced by Accenture as general information on the subject. It is not intended to provide advice on your specific circumstances. 

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