A new European supervisory agency will be able to impose fines on credit-ratings agencies following a deal reached on Wednesday night.

Representatives of the European Parliament, the European Commission and member states reached agreement on legislation aimed at supervising the work of credit-ratings agencies.

The European Securities and Markets Authority (ESMA) will have the power to fine credit-ratings agencies if they breach EU rules. The Commission had wanted to impose such fines itself. However, the agency will not be able to set the level of fines.
 
MEPs argued that ESMA’s power to directly supervise credit-ratings agencies should be matched by giving it the right to impose fines on agencies that breach operating and reporting rules.

Although some minor details need to be agreed, the legislation will almost certainly be approved.

Michel Barnier, the European commissioner for the internal market, said he welcomed the “very constructive approach” taken by all parties and said he was confident a final agreement would soon be reached.

The issue will be discussed by member states’ ambassadors on Wednesday (8 December) before the Parliament votes on it in plenary the following Tuesday or Wednesday (14 or 15 December).

Last year, the EU passed legislation setting standards for credit-ratings agencies, many of which were criticised for failing to spot potential problems when the financial crisis began.