Senator Nick Sherry, Minister for Superannuation and Corporate Law, has today met with banking and finance industry representatives in Sydney to discuss how to improve the usefulness and quality of ratings issued by credit rating agencies.
"One of the causes of the global financial crisis was the breakdown in the credit rating process, which often included an unquestioned over-reliance on ratings by users."
"That why I convened today's roundtables with banking and finance industry representatives to discuss how these ratings users think the scrutiny of credit ratings could be improved and to seek industry views on how to improve the quality of data underpinning ratings."
"While the Rudd Government has taken a leading role in improving oversight of rating agencies, the private sector can also drive efforts to improve the quality of ratings."
"Australia's efforts are ahead of many other countries and today's roundtables further demonstrate Australia's efforts to tackle the causes of financial turbulence."
"I am delighted that industry associations which represent all key sectors of the economy that either rely on, or initiate ratings, are involved in today's roundtables."
"As part of a global response, the Rudd Government acted early and undertook a review of ratings agencies here in Australia. The Government has since taken decisive action to upgrade the supervision of credit rating agencies."
"From July 1, all ratings agencies must be licensed and will be required to issue an Annual Compliance Report based on how they've conformed with tough global rules on issues such as conflicts of interest management."
"It is completely unacceptable to have such a systemically important set of entities such as ratings agencies operating in Australia but sitting entirely outside our regulatory system," Minister Sherry said.
Attending the banking industry roundtable were representatives from ANZ Banking Group, Commonwealth Bank, NAB and Westpac.
Attending the industry associations' roundtable were representatives from the Association of Superannuation Funds of Australia; Australian Bankers' Association; Australian Financial Markets Association; Australian Securitisation Forum; Australian Shareholders' Association; Financial Planning Association of Australia;
Financial Services Institute of Australia; Insurance Council of Australia; Investment and Financial Services Association; and the Securities & Derivatives Industry Association.
Mr Tony D'Aloisio, Chairman of the Australian Securities and Investment Commission (ASIC), also attended the roundtables. ASIC will be the regulator of credit rating agencies in Australia.
Treasury and ASIC will issue a ratings user reform report to Minister Sherry based on the outcomes of the roundtables.
The work of the roundtables will also inform Australia's international policy response on credit rating agencies which the Prime Minister will take to the G20 meeting in April.