Actually, the plans do not address the problem with ratings.
The problem is that the ratings come from companies that have access to information that is not made available to other market participants. As a result, other market participants are reliant on the rating services assessing this information and accurately conveying the results of their assessment in a timely manner.
Regular readers know that under the FDR Framework this problem is done away with. All market participants are provided access to all the useful, relevant information in an appropriate, timely manner.
As a result, market participants can analyze the data for themselves or pay a trusted third party expert to analyze the data for them.
By making the data available to all, the informational advantage that supports the rating services' oligopoly is eliminated and with it reliance by market participants on the rating services.
As the rating services frequently say, without this informational advantage they would have to compete based on their analytical skills. While talk is cheap, the rating services say that competing based on analytical skills would be good for them as demand for their services would increase.
A better plan for the EU would be not to "regulate" the rating services but instead to implement the disclosure requirements under the FDR Framework.
In a letter to European finance ministers including George Osborne, Michel Madelain, chief operating officer at Moody's, said the changes would undermine investors' confidence.
On Tuesday, Michel Barnier, EC internal market and services commissioner, will unveil "proposals for legislation" that could radically change regulation of credit ratings agencies.
While the agencies have faced severe criticism during the financial crisis ... critics of Mr Barnier's widely leaked proposals say they will only increase debt market volatility.
Most controversially, Mr Barnier plans to force debt issuers to rotate rating agencies. He also proposes to give the European Securities and Markets Authority (ESMA) powers to vet agencies' methodology and insist, in exceptional circumstances, such as bail-out talks, sovereign debt ratings should be suspended.
The Association of Corporate Treasurers (ACT) said it was concerned over forced rotation in a market dominated by three main players - S&P, Moody's Investor Service and Fitch Ratings.
Martin O'Donovan, ACT's deputy director of policy, said that while companies would welcome more choice there were "huge practical difficulties" for rotation in the current "oligopolistic" market.
In his letter, Mr Madelain said allowing ESMA to "pre-approve" methodologies would "undermine credit rating agencies".