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Michel Barnier, the European commissioner in charge of regulation who helped broker a deal on the new law, said it aimed to reduce the over-reliance on ratings and establish a civil liability regime. The new rules should make it easier to sue the agencies if they are judged to have made errors when, for example, ranking the creditworthiness of debt.
The agencies came under fire for giving top-notch AAA credit scores to debt that later unravelled, and they provoked more criticism by downgrading countries at sensitive moments of the crisis.
The deal between the EU parliament and countries attempts to inject momentum into a regulatory drive to change the way the big three credit rating agencies - Fitch, Moody's, and Standard & Poor's - work. But the law has been softened during negotiations. "I think that the significance of this reform is limited because the political ambition has been scaled back", said Nicolas Véron of Brussels-based think tank, Bruegel.
A proposal to force debt issuers, such as companies, to rotate the agency they use to rank their bonds was also weakened. It will now apply only to resecuritised debt, a market that is largely dead. Rating agencies are already subject to stricter policing, since the establishment of ESMA as their chief European supervisor.