S&P Releases Plan to Renovate Its Rating System

S&P Releases Plan to Renovate Its Rating SystemNew York–Standard and Poor’s announced detailed plans Thursday to revamp its rating system, the Financial Times reports.The reform plan contains 27 action points, which center around four main areas. The first involves restructuring New York-based S&P governance procedures to remove any potential conflicts of interest. The ratings agency will appoint an ombudsman and hire an outside firm to oversee compliance and publish its results. The second focus area includes plans to confirm credit rating accuracy by taking factors such as trading liquidity and valuation of securities into account.S&P’s third area of improvement involves enhancing the transparency of all ratings; the fourth centers around further educating investors about the ratings process and finance in general.After recent investor discontent, all three major rating agencies are reviewing the way they do business, according to the Times. However, S&P is the first company that has devised and announced a plan to overhaul its ratings system.“We are going much further than adjusting our ratings methodologies and opinions,” S&P president Deven Sharma told the Times. “Investor education is key.”