On the 7th November, the Joint Committee of the European Supervisory Authorities (EBA, ESMA and EIOPA) launched a one month public consultation on the removal of mechanistic references to credit ratings in their guidelines and on the definition of sole and mechanistic reliance on such ratings. The term "sole and mechanistic reliance on credit ratings" is mentioned in Article 5(b)(1) of the European Regulation on Credit Rating Agencies Regulation (EU) No. 462/2013 but does not have a formal definition or its meaning included.

In order to have a common approach towards this issue, the ESAs have developed a definition of "sole and mechanistic reliance"and are now consulting on:

  • the proposed definition for "sole and mechanistic reliance", including examples;
  • the provisions in the three ESAs' guidelines that are not to be defined as mechanistic; and
  • those provisions that are to be considered as mechanistic and therefore should be amended.

The ESAs intend to refer to this definition in all their future guidelines, recommendations and draft technical standards where relevant.