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According to Coface, the regulation presented by the European Commission will not prevent a repetition of the subprime crisis. What is missing from new legislation, says Coface, is statistical analysis of how accurate ratings have been. This data would then serve to carry out quality control of the industry.



The new European regulation will force credit rating agencies to register in a European-wide database. The aim of the database is to collect performance information about rating agencies that operate within the European Union.



In addition, the new regulation addresses the issue of conflict of interest. Under the new rules, rating agencies will have to disclose the names of rated companies contributing to more than 5 per cent of the agency's revenue, they will be forbidden to rate companies in which their analysts own shares or financial products and they will not be able to carry out consulting or advisory activities for companies which are also subject to rating.



Finally, to increase the transparency of the rating process agencies will have to make their methodologies, models and rating assumption public.



However, the idea of a single European supervisor for rating agencies was dismissed by Commissioner McCreevy.