Ratings houses may get more power
The Australian Securities and Investments Commission (ASIC) has made clear that credit ratings agencies may soon get tighter control over which product issuers use their analyses and how they are used.
In a consultation paper issued this week, the regulator has canvassed removing the class order that has allowed product issuers to use ratings house analyses without necessarily getting the specific permission of the credit ratings agencies themselves.
ASIC said credit ratings agencies could control issuers’ use of their credit ratings via initiatives such as intellectual property licensing, but by withdrawing its relief the regulator would be allowing the agencies to also control the use and presentation of their ratings in Product Disclosure Statements by giving or withholding consent.
The consultation paper has called for submissions from the financial services industry and ASIC has said it will be taking into account a number of issues including the regulatory and financial impact, the balance between making credit ratings available to retail investors and promoting the accountability of credit rating agencies to investors and control of credit agencies over the use of their ratings.
The ASIC consultation paper noted that credit ratings agencies have argued that their ratings are not prepared with retail investors in mind, but suggests that this does not necessarily mean that the ratings are irrelevant to the decisions made by retail investors in relation to debt or structured products.
AUTHOR
Mike Taylor
Recommended for you
With the final tally for FY25 now confirmed, how many advisers left during the financial year and how does it compare to the previous year?
HUB24 has appointed Matt Willis from Vanguard as an executive general manager of platform growth to strengthen the platform’s relationships with industry stakeholders.
Investment manager Drummond Capital Partners has announced a raft of adviser-focused updates, including a practice growth division, relaunched manager research capabilities, and a passive model portfolio suite.
When it comes to M&A activity, the share of financial buyers such as private equity firms in Australia fell from 67 per cent to 12 per cent in the last financial year.
