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The interest rate benchmark - which was used in trillions of dollars-worth of financial contracts but became notorious when traders tried to manipulate it for their own profits - is being replaced by a new overnight rate, Sonia.
Financiers have been told they should start using the new risk-free rate to price contracts ahead of a planned shift off Libor, short for London Interbank Offered Rate, at the end of 2021.
But Andrew Bailey, head of the Financial Conduct Authority, said too many bankers are still using the old measure.
“There has hitherto been too much complacency about how these contracts would operate at the point Libor disappears,” Mr Bailey said, adding that some institutions have made “important progress on amending contractual documentation to reduce the risks of disruption or contract frustration”.
If companies do not either move to Sonia or put in place plans, in contracts, to adapt to Libor’s end, it could pose a risk to the stability of the financial system.
“Too many firms are not yet adequately aware. They are not yet making or planning the necessary investments in preparing systems, processes and business practices for transition,” said Mr Bailey.