New Assistant Treasurer Nick Sherry says Australian financial institutions have not been as “over-reliant” on the measurements of the ratings agencies as some of their foreign counterparts.

And he has welcomed the outcome of financial sector collaboration on the use of ratings agency information.

From July 1 ratings agencies will be required to hold an Australian financial services licence and issue annual compliance reports in line with international standards.

Releasing a report compiled by Treasury and the Australian Securities and Investments Commission (ASIC), following two banking and finance roundtable discussions over the use of credit ratings, Senator Sherry said the report “makes it clear that banks which input data into ratings processes have an important role to play”.

He said the level of “possible over-reliance on ratings in Australia has not been as acute as in other jurisdictions”.

The Federal Government has paid close scrutiny to credit ratings after the global credit crunch brought down many A-rated stocks.

The report raises four recommendations, including an ASIC commitment to consider options for investor education around over-reliance on credit ratings. The regulator has also pledged to work with the ratings agencies to progress their AFSL applications.

Financial sector firms are called on in the report to encourage more informed investment decisions.