Credit rating regulation may affect private and corporate banking

Wealth management and investment services should not place too much emphasis on the reports of individual Credit Rating Agencies (CRAs), according to one chartered financial planner.

Martin Bamford from Informed Choice made the statement in response to European Commission (EC) calls for stronger regulation for CRAs.

The proposals include measures to guarantee proficient and centralised supervision at European level and increased transparency to ensure all agencies have access to the same information.

Mr Bamford suggested the rating experts remain independent companies, but argued there should be improved rules governing market assessment and reporting.

’The opinions of credit ratings agencies can have a big impact on economies, so better regulation of these bodies is needed,’ he stated.

Greece’s debt has recently been downgraded by a series of credit agencies, with negative repercussions felt throughout the country; this is considered an example of the potentially damaging power of CRA pronouncements.

In the same statement, the EC outlined plans for consultation on reforming corporate governance in financial institutions. ADNFCR-2318-ID-19822546-ADNFCR