Credit ratings agencies: Comment from Allen Blewitt, Chief Executive of ACCA
We broadly welcome Mr McCreevy’s call for European-wide regulations of the credit ratings industry.
It’s a joke that an industry with such influence, particularly during the current volatile economic climate, is self-regulated and only subject to a toothless voluntary code of conduct.
The mere fact that credit rating agencies are paid by the companies they rate puts their independence in jeopardy. Their work must be objective and greater transparency is required. They have for too long had the luxury of not having to adhere to good governance and oversight procedures.
We have to strike the right balance when regulating the market between protecting and over-burdening. A range of measures is necessary to bring about transparency in the ratings process. But this needs to be done in a way so that various stakeholders can be satisfied that conflicts of interest are managed and that ratings agencies are doing an effective job in relation to markets and
Basle 2. Regulation would be part of the solution, but it can't be used in isolation.
It is essential to address what motivates and drives the relationship between credit ratings agencies and their clients since the early 1990s. This is a perfect example for when an international set of regulations and other measures are imperative to regain trust in financial markets and avoid further credit crunched victims.
For further information please contact:
Helen Thompson, ACCA Newsroom phone: +44 (0)20 7059 5759 / + 44 (0)7725 498 654 e mail: helen.thompson@accaglobal.com