Status: Please note you should read all Brexit changes to the FCA Handbook and BTS alongside the main FCA transitional directions. Where these directions apply the 'standstill', firms have the choice between complying with the pre-IP completion day rules, or the post-IP completion day rules. To see a full list of Handbook modules affected, please see Annex B to the main FCA transitional directions.

Article 8 Exemption

In cases where there is limited quantitative evidence to support the predictive power of a credit rating methodology, a credit rating agency shall be exempt from complying with Article 7 of this Regulation if it:

  1. (a)

    ensures that credit rating methodologies are sensible predictors of credit worthiness;

  2. (b)

    applies internal procedures in a consistent way and over time and across different market segments;

  3. (c)

    has processes in place to ensure that systemic credit rating anomalies highlighted by back-testing are identified and are appropriately addressed.