UK to oppose EU-funded rating agency

BRITAIN will oppose the introduction of an EU-funded credit rating agency (CRA), after ministers dismissed it as a waste of European taxpayers’ money.

Earlier this month Michel Barnier, the EU internal market commissioner, floated the idea of a new European CRA to boost competition in a sector that is dominated by three big players: Moody’s, S&P and Fitch.

He said the agency might need to be funded at least in part by public money, due to high barriers to entry for new players.

European officials believe that a lack of competition was partly to blame for agencies giving investment-grade ratings to products based on subprime mortgages, which helped fuel the financial crisis.

But financial secretary to the Treasury Mark Hoban yesterday said Britain would oppose the use of public money in establishing a new CRA.

He said: “Credit rating agencies must have a sound business model that doesn’t depend on money from the EU.”

Chuka Umanna, a Labour member of the Treasury select committee, said Hoban was wrong to dismiss the idea.

“It’s extraordinary to think that taxpayers wouldn’t want a more competitive CRA market. A new agency might need public money to get started”.