Watchdog body urges common line on rating agencies

BRUSSELS, Sept 17 (Reuters) - Policy-makers should forge a common, global approach to reforming how credit rating agencies (CRAs) are supervised in the wake of the credit crunch, an international group of market watchdogs said on Wednesday.

The intervention will be seen as a warning shot to EU Internal Market Commissioner Charlie McCreevy who wants to introduce a mandatory shake-up of the sector within the 27-nation European Union that goes much further than oversight being introduced in the United States.

The International Organisation of Securities Commissions, (IOSCO) made up of more than 100 national market watchdogs from the EU, United States, Japan and elsewhere, said it was looking at how a voluntary industry code of conduct which it drafted -- and beefed up earlier this year -- could be better supervised.

"IOSCO favours a consistent, global regulatory approach to monitoring the activities of CRAs," the global regulatory body said in a statement.

"It urges legislators to consider the regulatory consensus represented by the IOSCO code of conduct when framing legislation as any fragmentation runs the risk of a reoccurrence of problems with product ratings," IOSCO said.

The group has set up a task force to study improvements in supervision of the code.

IOSCO's statement comes a day after national regulators in the EU said McCreevy's draft plans were too intrusive, would be difficult to implement, and would affect third countries.

Ratings agencies such as Standard & Poor's (S&P) (MHP.N), Moody's (MCO.N) and Fitch (LBCP.PA) have been criticised as too slow to warn investors about risks in the securitised products that they graded.

"Events in the last 12 months have clearly shown the need for greater interaction between CRAs and regulators and the task force will examine the possibility of developing an international monitoring body to discuss issues with CRAs and to advance the expectations of the international regulatory community," IOSCO said.

"It is envisaged the body would be similar in structure and purpose to the auditing standards oversight body, the (U.S.) Public Interest Oversight Board," IOSCO said. (Reporting by Huw Jones, Editing by Mark John)