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Australian review of credit rating agencies.



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Minister for Superannuation and Corporate Law http://minscl.treasurer.gov.au

PRESS RELEASE

NO. 26

AUSTRALIAN REVIEW OF CREDIT RATING AGENCIES

Senator the Hon Nick Sherry, Minister for Superannuation and Corporate Law, today announced that he has asked the Treasury, working closely with the Australian Securities and Investment Commission (ASIC), to review the regulation of credit rating agencies (CRAs) and research houses in Australia.

“There have been some very serious concerns voiced to me about the role CRAs may have played in some aspects of recent financial market problems, including the U.S. sub-prime mortgage situation - so we need to make sure the system is up-to-date.”

“I have asked Treasury and ASIC to immediately review the regulation of credit rating agencies and to seek input from the Australian Prudential Regulation Authority (APRA) and other relevant agencies, together with stakeholders from the investor, shareholder and superannuation communities,” Minister Sherry said.

In addition to CRAs, the review will examine financial product research houses, in particular the role they played in the provision of advice to investors in several major recent corporate collapses, such as Westpoint.

“In relation to research houses, I’ve requested a review of the appropriateness of the current regulatory framework and whether it might also require updating.”

“To ensure we get the full picture, the review will also look at how ratings advice is used by retail and wholesale investors. As such, I have asked Treasury and ASIC to consult with key investor groups such as the Securities and Derivatives Industry Association, the Investment and Financial Services Association, the Association of Superannuation Funds of Australia and the Australian Shareholders’ Association,” Minister Sherry added.

Minister Sherry also held extensive discussions on international efforts regarding CRAs with Mr Greg Tanzer, Secretary General of the International Organisation of Securities Commissions at a recent meeting in Spain.

“Enhancing the operation, transparency and effectiveness of financial system gatekeepers like CRAs is of paramount concern to this Government,” said Minister Sherry.

The review will commence work immediately and report to the Government within six months.

CANBERRA, 22 May, 2008

Contact: Anna Fenech 0417 454 811