Skip to main content



Search form

ESAs’ BoA decides in ESMA’s favour in the appeal by Scope Ratings

12 January 2021

The Joint Board of Appeal (BoA) of the European Supervisory Authorities (ESAs – European Banking Authority, European Insurance and Occupational Pensions Authority, and European Securities and Markets Authority) decided in ESMA’s favour in the appeal put forward by Scope Ratings GmbH (Scope) against ESMA’s decision from May 2020.

With this decision, ESMA fined Scope with an overall amount of €640,000 for negligent non-systematic application of its 2015 Covered Bond Methodology and for negligent non-compliance with the requirements of the Credit Rating Agencies Regulation (CRAR) regarding the material changes introduced in the 2016 Covered Bond Methodology.  

The BoA unanimously dismissed the appeal and confirmed ESMA’s decision from May 2020. ESMA was therefore correct in interpreting the provisions of several articles of the CRAR and the BoA confirmed the following:

  • In accordance with Article 8(3), CRAs shall have in place methodologies that are systematic in their design and that are applied systematically;  
  • Divergences from methodologies should be allowed only on narrow grounds;
  • Where there is an infringement of Article 8(3) due to the lack of systematic application of rating methodologies, the infringement is deemed to continue until any ratings issued in an unsystematic manner become aligned with such methodologies or are withdrawn; and
  • ESMA was right in adopting a case-by-case approach to the notion of ‘material change’ to a methodology and in linking the notion to whether or not there could have been a potential impact on a rating.

Steven Maijoor, Chair, said:

“I welcome the BoA outcome, which confirms ESMA’s decision in its entirety. It highlights important aspects based on several central provisions from the CRA Regulation such as ESMA’s duty as a supervisor to ensure that credit rating methodologies are not only designed in a systematic manner but also applied in a systematic way and reminds the high standard of care expected from CRAs.”

The findings of this decision will be considered in ESMA’s supervisory and enforcement actions in the future.

Next steps

In accordance with Article 61 of ESMA Regulation and Article 263 TFEU, the decision of the BoA can be appealed before the Court of Justice of the European Union (CJEU) within 2 months. In the absence of an appeal before the CJEU, ESMA’s decision will become final.