Standard & Poor?s has unveiled an overhaul of its ratings business on Thursday, an S&P spokesman said, as the company responds to widespread criticism about the quality and accuracy of credit ratings. Ratings agencies have come under fire for their role in the US subprime crisis, with critics saying they were too slow to downgrade highly-rated securities linked to poor quality mortgages. Some argue that the ratings should not have been assigned in the first place.
Regulators and politicians are looking closely at the ratings agencies? business model, where ratings are paid for by issuers rather than investors, and also the efforts they have undertaken to ensure the accuracy and reliability of ratings.
Moody?s Investors Service this week asked for comment on a series of proposals aimed at shaking up structured finance ratings. The International Organisation of Securities Commissions, the world?s top market regulators group, said on Wednesday, it planned to change the code of conduct for agencies, to ban them from helping to design structured products that they also rate.
The new actionplans, which will be implemented throughout S&P?s global organisation, include enhancements in four areas of governance, analytics, information, and education.