UK: whither the credit rating industry?

Whither the credit rating industry? is the title of paper nine in the Bank of England's financial stability series. Published earlier this week, and available here (pdf), the paper describes the role of credit rating agencies (CRAs) and the failures observed during the financial crisis. The paper's authors argue that:

... rating agencies perform a valuable role, but that the common and often mechanistic reliance on ratings for information, certification and regulatory purposes lies beneath many of the problems observed during the crisis. The policy priority should therefore be to reduce the scope of such reliance, but to the extent that CRAs nevertheless retain a strong influence in financial markets there may also be a case to consider structural measures to directly tackle potential conflicts of interest in the way in which ratings are produced".