Are banks obliged to disclose credit adjustment spreads to SONIA?

Are banks obliged to disclose credit adjustment spreads to SONIA?

LIBOR will be replaced by SONIA from the beginning of 2022. With SONIA rates typically lower than LIBOR, banks will seek to make up the difference by application of a Credit Adjustment Spread (CAS), likely to be calculated by reference to the median difference between LIBOR and SONIA over the previous five-year period.

In the May 2021 edition of the Journal of International Banking and Financial Law, Paul Sinclair QC, a barrister at Fountain Court Chambers considers  the extent to which banks will be required to disclose the existence of the CAS and its method of calculation to customers in the light of previous findings by the court of the lack of an obligation on banks to disclose the Credit Line Utilisation (CLU) to customers.

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About the author:

Neeta started her legal career at Allen & Overy in 2008 in the midst of the global financial crisis and the collapse of Lehmans where she gained most of her paralegal experience.

Neeta also did a short stint in litigation at the Revenue and Customs Prosecutions Office in 2006. Neeta graduated with a 2:1 honours degree from University of London, Queen Mary College and went on to obtain a distinction from the College of Law in the Legal Practice. She has been working at Lexis Nexis since April 2013.