The European Securities and Markets Authority (ESMA) last week hit out at rating agency surveillance, identifying a number of shortcomings in the process. Steven Maijoor, ESMA chair, said the report highlighted failings that could affect the quality of the rankings and also weaknesses in the level of disclosure and transparency that could be detrimental to investor protection. The findings came from an investigation between October 2013 and September 2014, "prompted by continued relevance of structured finance products and the high outstanding volumes in issuance", ESMA said. It concentrated on DBRS, Fitch, Moody's and S&P as they account for almost all European structured finance ratings, and on RMBS - the biggest asset class. The results highlight four "critical issues" identified at one or more agency. These are quality control over the data used, the incomplete application of full methodologies, delays in completing annual reviews of ratings, and a need to strengthen internal reviews.
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