The Federal Government recently imposed licensing and reporting standards on credit ratings agencies. The agencies have been blamed for inaccurate measurements which contributed to the worldwide financial crisis.

Now the ASIC will abolish exemptions that allowed the credit ratings agencies to operate without an Australian financial services licence (AFSL).

Agencies and research houses will be compelled to hold an AFSL and must submit annual compliance reports in line with standards set by the International Organisation of Securities Commissions (IOSCO).

Corporate Law Minister Nick Sherry announced the measures last week after ASIC and the Treasury Department completed a joint report.

Senator Sherry expects the changes to shore up local standards and promote uniform international regulation.

He says there is a global consensus “for improved regulation of credit ratings agencies, whose role has come under scrutiny due to their involvement in providing inaccurate ratings of structured financial products in the lead up to the US subprime loans crisis”.

The ratings agencies appear to be embracing the inevitable, with a spokesman for Standard & Poor’s telling insuranceNEWS.com.au the company welcomes the decision.

“We support any regulatory moves which enhance transparency, and help restore market confidence in credit ratings,” she said. “We believe the ASIC/Treasury findings are largely consistent with the principles of IOSCO, which we support.”

The Government has also announced it will convene an investment roundtable to discuss the role investment firms can play in improving the development, assessment and usage of ratings.