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Commissioner McCreevy criticized that voluntary self-regulation by the sector had not worked. With regard to the IOSCO Code of Conduct he underlined that “international convergence is desirable if it can be achieved – but per se, this is not enough”. The steps undertaken by the main rating agencies are insufficient, the Commissioner said and concluded that ‘a regulatory solution at European level is now necessary’. “We need to drive things forward and set the pace”, the Commissioner said underlining the European role.
The Commission will come forward with a proposal in October on the registration and external oversight regime for rating agencies. This includes that European regulators will supervise the policies and procedures followed by the CRAs.
“Most important of all is the need to ensure that incentive structures are right,” McCreevy said. “We must have incentive structures too for bankers and others involved in taking risk in the credit markets that reward prudence through the ups and downs of credit cycles.”