BRUSSELS, Nov 12: The European Commission called on Wednesday for a clampdown on credit rating agencies, proposing new rules for them in hopes of helping restore confidence in shell-shocked financial markets.

Leading rating agencies Moody’s, Standard and Poor’s and Fitch have come under fire for being too slow to alert investors to the dangers of investments based on US high-risk sub-prime home mortgage loans. Under the proposals, such rating agencies would have to register with European supervisors, as they already have to in the US. Supervisors would not be able to interfere with their ratings decisions.

Among other proposals, the commission said that rating agencies — paid by the companies they rate — should be banned from doing consulting work over concerns about potential conflicts of interests.

They would also be required to disclose how they make their ratings and would not be allowed to rate a security if they did not have sufficiently reliable information to do so properly.

Rating agencies would also have to have at least three independent directors on their boards whose pay is not tied to business performance, internal reviews of rating quality would be required and annual transparency reports would have to be published.—AFP