The latest dent in credit rating agencies' (CRAs) reputation could be legal action from the European Union, following a scathing report into how they set their all-important scores.
An influential EU agency, the European Securities and Markets Authority (Esma) which was set up in 2011 to examine the rating agencies, has published a report which criticizes the three main ratings agencies: Moody's; Fitch and Standard & Poor's (S&P). The agencies are accused of "reliance on junior support staff" and "disclosure of upcoming rating actions" to unauthorized third parties, among other alleged failings. Esma has also warned it "may take action as appropriate in due course" if it finds that any of its findings amount to a breach of regulations.
"Esma's investigation revealed shortcomings in the sovereign ratings process which could pose risks to the quality, independence and integrity of the ratings and of the rating process," Steven Maijoor, Esma chair, said.
"The CRAs who were subject to this investigation still need to make improvements in their working practices to ensure their full compliance with the CRA Regulation and to eradicate inadequate practices from the past."
(Read more: Can you still trust rating agencies?)