[ESMA33-5-87] Q&A on the Implementation of the Regulation (EU) No 462 2013 On CRA

ESMA has published a revised version of the Q&As relating to the CRAR. Specifically, ESMA has added one modified Q&A in Part III: Methodologies, models and key rating assumptions on Article 8(7) – Error reporting. We would like to present the 3 sub-questions in full, together with a summary of the corresponding answers:
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### Question 8
(a) What types of errors should be reported to ESMA and all affected rated entities?
(b) Does Article 8(7)(a) require a CRA to notify ESMA and all affected rated entities of an error which
does not lead to a change in any issued credit rating??
(c) Are CRAs allowed to notify the errors in rating methodologies to the affected entities in the press
release or credit report published after the re-rating exercise??
#### Answers
(a) The Regulation encompasses errors not only in rating methodologies but also in their application, including errors in methodologies, models, and related documents. ESMA considers instances such as incorrect model implementation, deviating from the specified methodology, as examples of application errors. Such errors must be reported to ESMA and all affected rated entities, irrespective of subsequent rating changes, as stated in Article 8(7)(a).
(b) ESMA emphasizes that errors triggering a review of issued credit ratings should be promptly notified to ESMA and all affected rated entities under Article 8(7)(a), regardless of whether the review leads to a rating change.
(c) When a CRA becomes aware of errors in methodologies or their application, immediate notification to ESMA and affected entities is required. Public disclosure of error explanations and their impact on credit ratings should be provided on the CRA’s website for easy accessibility. In the event of a review and subsequent issuance of a new credit rating due to errors, the CRA should explain in the relevant report that the review was prompted by an error and reference the published information on their website, as per Article 8(7)(b) of the Regulation.