PensionsEurope is generally satisfied with the definition of “sole and mechanistic reliance” on credit ratings provided in the consultation paper, since it recognizes the need for additional discretion. We believe that mandatory references to credit ratings should not be systematically made in the ESAs s guidelines, recommendations and draft technical standards. Stakeholders should be able to use alternative tools and/or practices and be evaluated thereof. This would be the case, for instance, when it comes to assess the credit risk of IORPs and its sponsor.

However, as stated in our general remarks, we do not believe that the reduction of the overreliance on credit ratings should result in the replacement of external ratings by internal ratings. We support encouraging due diligence in respect to the use of credit ratings, and to promote the use of own risk assessment through the adoption of principles which are respectful with the wide variety of existing internal risk assessment models.