Treasury Committee's terms of reference for Credit Rating Agencies inquiry

16 December 2011

The Treasury Committee today publishes the terms of reference for an inquiry into Credit Rating Agencies.

The Committee invites written submissions of up to 3,000 words by Thursday 2 February 2012 on the following points:

1. Is the methodology used by ratings agencies sound and transparent?

2. Do the rating agencies have the right incentives to do their job properly?  Do they have conflicts of interest on either the corporate or sovereign side?  If so, what is their cause?  Do the agencies face adequate competition?

3. How accountable are the major credit rating agencies?  What is the appropriate role for independent ratings agencies?  Have the ‘big three’ agencies become too powerful? 

4. What effect do rating agencies have on the efficient allocation of capital?  How is investor behaviour affected by rating changes?

5. How embedded are agency ratings within the national and international regulatory frameworks?  Is this changing under new regulatory frameworks being introduced?

6. Are the proposals put forward by the European Commission with respect to ratings agencies based on the right objectives?  Will they achieve the Commission’s aims?

7. The sovereign rating methodology of agencies includes an assessment of national and international political factors.  Do the agencies influence the political process in any way?  What are the appropriate limits to credit rating agency political influence?  For example, do credit ratings have an impact on national fiscal planning and budget planning cycles and therefore, potentially, economic growth paths?  If so, is this appropriate?

8. Have recent downgrades of sovereign debt by the credit rating agencies (e.g. the downgrades of the United States and a number of eurozone sovereigns) illustrated any of the issues raised by these terms of reference?  Are the downgrades supported by the evidence?


Written evidence should be in Word or rich text format—not PDF format—and sent by e-mail to The body of the e-mail must include a contact name, telephone number and postal address. The e-mail should also make clear who the submission is from. The deadline is 12 noon on Thursday 2 February 2012. Submissions should be no longer than 3000 words. Submissions should be in the format of a self-contained memorandum. Paragraphs should be numbered for ease of reference, and the document must include an executive summary. Further guidance on the submission of evidence can be found at (PDF PDF 1.25 MB).

Submissions should be original work, not previously published or circulated elsewhere. Once submitted, your submission becomes the property of the Committee and no public use should be made of it unless you have first obtained permission from the Clerk of the Committee. Please bear in mind that Committees are not able to investigate individual cases.

The Committee normally, though not always, chooses to publish the written evidence it receives, either by printing the evidence, publishing it on the internet or by making it publicly available through the Parliamentary Archives. If there is any information you believe to be sensitive you should highlight it and explain what harm you believe would result from its disclosure; the Committee will take this into account in deciding whether to publish or further disclose the evidence.

For data protection purposes, it would be helpful if individuals wishing to submit written evidence send their contact details in a covering letter. You should be aware that there may be circumstances in which the House of Commons will be required to communicate information to third parties on request, in order to comply with its obligations under the Freedom of Information Act 2000.


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