Over-reliance on credit ratings Directive

Directive 2013/14/EU (the "Directive") amends different pieces of EU legislations including, but not limited to, the UCITS directive and the AIFMD. According to the Directive, UCITS management companies and AIFM (including self-managed investment companies) will be required, in the context of the risk management process that they must implement, not solely or mechanically to rely on credit ratings issued by recognised credit rating agencies for assessing creditworthiness of the UCITS and/or AIF' assets.

National competent authorities are in charge of the monitoring of the adequacy of the credit assessment processes of UCITS and AIFMs. They will have to assess the use of references to credit ratings in the UCITS or AIF's investment policies, and where appropriate, encourage mitigation of the impact of such references with a view to reducing sole and mechanistic reliance on credit ratings.

The Directive will also amend the IORP Directive (1) to introduce similar principles.

Member States are required to implement and apply the provisions of the Directive by 21 December 2014 at the latest. At this stage, Luxembourg has not yet implemented the Directive.

(1) IORP Directive refers to Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and supervision of institutions for occupational retirement provision.