The City's top regulators today demanded banks and insurers tell them their plans for moving away from the Libor rate used in contracts worth trillions of pounds.
Firms are currently contemplating how to transfer often complex contracts and systems referencing the rate onto new benchmarks before 2021, when the scandal-hit Libor may become defunct.
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) today wrote to the firms in a "Dear CEO" letter to seek "assurance that firms’ senior managers and boards understand the risks associated with this transition and are taking appropriate action now".
Business leaders have until 14 December to provide a summary of the risks related to Libor for their businesses as well as an action plan.
Libor still exists, with Intercontinental Exchange running an improved version, but regulators are still trying to push firms to move onto replacements. Today they reiterated their concerns about the "absence of active underlying markets" and changes in how lending works that threaten Libor's future sustainability.
A UK Finance spokesperson said: “Effective and transparent benchmarks are an essential part of market activity and underpin the wider integrity of our financial system. With the Libor benchmark linked to a number of important financial activities, it is essential that industry and the regulator work together to ensure a smooth transition to an alternative rate.”
Sonia, the Sterling Overnight Index Average, is the rate preferred by the FCA and the Bank of England. Sonia is based on actual transactions, rather than the judgements of the submitting banks.
Libor, the London Interbank Offered Rate, remains one of the key cogs in the global financial system, measuring the interest rates offered on loans by banks in five currencies and seven maturities.
However, the rate was the source of one of the biggest scandals to ever hit the banking industry, after some banks were found to have manipulated their submissions to a panel which announced the rates for their own profit.
The criminal repercussions are still being felt, with jailed ex-Barclays trader Jay Merchant deported to India this year.
The regulators warned that "transition will be complex and will take time", but added that a lack of preparation could harm financial stability.