Rating agencies

Supervised institutions may use recognised credit rating agency ratings for certain regulatory purposes. Recognition helps ensure that ratings used in regulation meet minimum quality and integrity expectations.

Ratings for regulatory reporting

Banks, insurers and other supervised institutions may rely on external ratings when calculating regulatory requirements or preparing reports, but only where the applicable rules permit it and the agency is recognised for that purpose. Recognition does not mean every rating is endorsed; it means the agency satisfies the relevant framework for regulatory use.

International requirements

The recognition process considers international standards for credit rating agencies, including governance, independence, transparency, methodology, conflicts of interest and quality controls. Agencies must have processes that support consistent rating production and allow users to understand the meaning and limitations of ratings.

No prudential supervision

Recognition is not the same as full prudential supervision. SFMA does not supervise recognised rating agencies as if they were banks or insurers, and it does not verify the correctness of individual ratings. Users remain responsible for understanding rating assumptions and performing their own risk assessment.

Use by supervised institutions

Institutions that use ratings for regulatory purposes should ensure that the rating is eligible, current and relevant to the exposure or instrument concerned. They should also avoid mechanical reliance on ratings where internal risk assessment is required.

Recognised agencies and concordance

The page links to a recognition document and concordance tables. Concordance information is important because ratings use agency-specific scales, and regulatory reporting often needs a mapping between those scales and the categories used in prudential rules. Supervised institutions should verify the recognised agency, the rating class and the applicable mapping before relying on a rating in regulatory calculations.

Recognition should therefore be understood as an eligibility decision for regulatory use, not as an endorsement of an issuer, instrument or individual rating. Institutions remain responsible for internal risk assessment and for checking whether a rating is permitted for the exposure and calculation method concerned.