LIBOR Decommissioning Project
There is a LIBOR decommissioning project at all the major banks in the UK. According to the IR35 Resistance Group, many of these projects have been put in danger due to the decision of the major banks to put a blanket ban on using contractors who operate via personal service companies. This could cause major problems for the banks regulatory systems.
Contractor Questions on the LIBOR Decommissioning Project
- When do the banks need to have the LIBOR Decommissioning Project ready?
- Why are the banks stopping using personal service company contractors?
- How will IR35 hit banks regulatory systems?
- Will Any Banks LIBOR Decommissioning Project be late?
- Which Banks are operating blanket bans on contractors?
When Do the Banks Need to Have the LIBOR Decommissioning Project Ready
The banks are currently moving over to SONIA – the Sterling Overnight Indexed Average. So they have to decommission LIBOR.
According to the Bank of England “The FCA has secured panel bank support to continue submitting to LIBOR, but only until 2021. Beyond this date the future of LIBOR is not guaranteed”
The banks are supposed to start using the new trading instruments by the end of 2020. LIBOR will be phased out by the end of 2021. The major banks must have their systems up and running by then. The chances of them being able to do this are currently being hindered by the implementation of the Government’s IR35 reforms.
Why Are the Banks Stopping Using Personal Service Company Contractors
Of course the banks could continue to use contractors operating via personal service companies. According the the Government’s IR35 reforms any contractor who passes HMRC’s Check Employment Status for Tax (CEST) online IR35 test is free to carry on using his or her personal service compays.
The banks could easily get their contractors to sit the CEST test. If they passed it they could continue to operate via their PSCs. This what happened when the Government implemented this in the public sector in 2017.
Why the banks are, instead, putting blanket bans on personal service company using contractors is very strange. It is jeopardising their regulatory projects including their LIBOR Decommissioning Project.
It is a strange time to be taking a gamble with this.
How Will IR35 Hit Banks Regulatory Systems
Many companies say that “we are our computer systems”. There is nowhere where this is more true than the at major UK banks. And these banks are heavily dependent on experienced IT contractors.
Because of the looming Government IR35 reforms in the private sector many contractors at the major banks are currently being told that they cannot use their personal service companies any more. They are being told that they must operate under PAYE either through an umbrella company or through their agency or managed service provider.
This will mean a huge drop in take home pay for contractors. It could mean some of the contractors plying their trade elsewhere rather than taking the effective pay cut.
They would be taking both their systems knowledge and their business knowledge of the LIBOR Decommissioning Project with them. It will be the same for other vital regulatory projects that the major banks are working on.
Will Any Banks LIBOR Decommissioning Project Be Late
Said a spokesman for the IR35 Resistance Group “The regulators and the government don’t care if banks make money or not. What they care is that they comply with rules and regulations.
“If the LIBOR decommissioning project is late because of IR35 it will be a major disaster”.
It seems that at least some of the major UK banks are realising that here will be an impact on their LIBOR Decommissioning Project caused by IR35. They are currently doing an impact analysis on the impact of IR35 on their regulatory projects.
One bank is even admitting internally that the LIBOR Decommissioning Project will be delayed.
Said a source “Basically, a failure of the LIBOR Decommissioning Project for banks is as bad as say an NHS hospital going bankrupt or doctors walking out .”
And this has now been put very much in danger by the blanket bans by the banks on using personal service company contractors.
Which Banks Are Operating Blanket Bans on Contractors
Banks, so far, who have put blanket bans on hiring (or renewing) personal service company contractors include:-
- Lloyds Bank
- Barclays Bank
- Tesco Bank
- Morgan Stanley
If many of their contractors decide not to take effectively huge income cuts and take contracts elsewhere then the banks ability to get the LIBOR Decommissioning Project done on time will be severely compromised.
To find out more about the IR35 Resistance Group (or join it) click on IR35 Resistance Group
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