Insurance brokers are likely to be big users of new domestic credit ratings agency Australia Ratings, which has become the first agency licensed to rate local retail and institutional financial markets.

Since the beginning of this year, the Australian Securities and Investments Commission has required credit ratings agencies to hold an Australian financial services licence (AFSL).

With none of the three large US ratings agencies operating in Australia applying for an AFSL to provide credit ratings and research to the retail financial market, Australia Ratings MD Chris Dalton says he recognised a gap in the market.

“The initial focus of the company will be on any debt security or fixed income product that is available in the retail market,” he told insuranceNEWS.com.au. “We will also offer our services to financial institutions be they banks or insurance companies that wish to promote their creditworthiness and credit rating in the retail market.”

Mr Dalton, who has worked more than 30 years in Australia financial markets, including eight years as MD of Standard and Poor’s Australian and NZ operations, says his new company expects insurance brokers and financial planners to be strong users of the new service.

“Insurance brokers have always been conscious of making sure that the policies and the insurers that they recommend meet the needs of their clients, and also have financial strength in order to honour their commitments under insurance policies,” he said.

“We are currently also in discussions with a couple of financial planning groups to provide them with our assessments on the credit ratings of various financial institutions that their planners use in their recommendations and statements of advice to clients.”

Australia Ratings will release public ratings when requested, as well as providing customised services to different sectors and companies.