This proposed law seeks to reduce the scope for uncertainty and litigation arising from the withdrawal of a key interest rate from the UK financial system.
Critical Benchmarks (References and Administrators’ Liability) Bill [HL] (250KB PDF)
On 13 October 2021, the House of Lords is scheduled to debate the second reading of the Critical Benchmarks (References and Administrators’ Liability) Bill.
The aim of the bill is to reduce the scope for uncertainty and litigation arising from the withdrawal of a key interest rate which is used as a ‘benchmark’ in the UK financial system.
Benchmarks are indices used to work out amounts payable in contracts (usually financial ones). A ‘critical benchmark’ is one that is considered particularly important because of its wide use. In the UK, the only critical benchmark is the London interbank offer rate (LIBOR).
The Bank of England has stated that the calculations underlying LIBOR are increasingly unreliable, creating a systemic risk to the UK economy. Therefore, it has been working with other regulators and market participants to transition away from LIBOR. However, some contracts will face significant barriers to moving away from LIBOR. These are known as ‘tough legacy’ contracts.
The Financial Services Act 2021 amended the regulations governing benchmarks to deal with the wind-down of a critical benchmark and to manage tough legacy contracts. The changes granted the Financial Conduct Authority (FCA) certain powers, such as prohibiting new contracts from using the benchmark and prescribing how the index calculation is made.
The bill’s provisions would add further measures to the benchmark regulations that are intended to:
The Government states that reducing legal disputes related to the wind-down of LIBOR should result in lower costs for firms and lessen the risk that disputes undermine an orderly wind-down, which could in turn impact the stability of the UK financial system.
Critical Benchmarks (References and Administrators’ Liability) Bill [HL] (250KB PDF)
The Sovereign Grant Bill is a government bill which would amend how the sovereign grant is set. This is a grant paid to the King to support the work of the sovereign. The bill would enable the size of the sovereign grant to be reduced following the completion of a 10-year works project on Buckingham Palace. The bill received cross-party support and was not amended in the House of Commons.
The Financial Services and Markets Bill [HL] is a wide-ranging bill that aims to reform the way the UK financial services sector is regulated. This briefing provides a summary of the bill’s second reading and committee stage in the House of Lords ahead of its further consideration at report.
![Financial Services and Markets Bill [HL]: Progress in the Lords](https://lordslibrary-parliament.studio24.dev/content/uploads/sites/2/2020/09/Economy-568x426.png)
The Taxation (Energy and Vehicles) Bill is a money bill that would implement three tax measures as part of the government’s package of support to tackle increased energy prices. The bill would increase the electricity generator levy, increase the rate of tax-free mileage allowance for employees, and provide a 12-month vehicle excise duty exemption for HGVs.
