Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Hansard source

I think I got all that, and it is a very good question. This is an important issue. The performance of credit rating agencies has been observed and analysed in the context of the world financial and now economic crisis. It was identified as one of the key failings that led to the financial crisis, the so-called subprime crisis, in the United States. The unquestioning use of the ratings by credit rating agencies, the over-reliance on them by users, was a major contributing factor. It is completely unacceptable to have a systemically important set of entities such as credit rating agencies that operate in Australia—and, indeed, in most countries of the world—being without any oversight whatsoever. They are outside our regulatory system. They are regulated—to the extent they are—by the United States. Of course, this is of deep concern, given what has occurred.

On 13 November last year I announced our decision to bring credit rating agencies under federal Australian regulation for the first time. There was a review and—before we have criticism of reviews—the review was expeditious; it was an important area. The review has concluded and action has been announced. For the first time all rating agencies in Australia will require a licence, but we have not stopped there. They will also be required to issue an annual compliance report based on how they have conformed with what are now tough global sets of minimum rules on issues such as conflicts of interest management. Australia is well ahead of most other countries in this regard. I’m getting another two minutes? Australia is well ahead—