Superannuation Minister Nick Sherry gave further details late last week on how regulation of product research houses and credit ratings agencies (CRA) will be boosted in 2009.
Research houses and CRAs in Australia will have to report to ASIC annually on the quality and integrity of their ratings processes, including conflicts of interest management, Sherry said.
The firms will have to submit examples of how they assess different asset classes directly to ASIC, he said.
This could include submitting methodology on how they assess Australian equities funds, structured products, mortgage-backed securities and other complex securities.
Research houses and CRAs will not have to submit examples of how they rate each and every product in the marketplace to ASIC, but rather the structure and methodology on how they rate individual product types, Sherry said.
Pushing reforms of research houses and CRAs is a high priority and Sherry said he will hold several roundtables during February on CRAs.
The move comes after the “lamentable” errors some firms made in the wake of the global financial crisis, he said.
Morningstar head of adviser and research Anthony Serhan said Sherry’s remarks were entirely appropriate.
“Research houses play an important role and moves towards closer scrutiny has to be good for investors. Having more detail around the proposals is an important step in bringing this to realisation and we look forward to the discussion,” he said.
Spokespeople from van Eyk, Lonsec, Standard and Poor’s and Zenith were not available for comment by press deadline. Research house Adviser Edge was unable to comment.
The Government had already announced last November that research houses and CRAs will be required to hold an Australian Financial Services Licence.
