APRA publishes updated guidelines on Recognition of an External Credit Assessment Institution

APRA has published an updated version of its guidelines on Recognition of an External Credit Assessment Institution, following a review that began when the previous guidelines were temporarily withdrawn in May 2026. The guidelines, which had not been updated since 2013, set out the eligibility criteria and process APRA uses to recognise a credit rating agency as an External Credit Assessment Institution, or ECAI, whose ratings authorised deposit taking institutions and insurers may then use to determine risk based regulatory capital on their publicly rated credit exposures.

The updated guidelines clarify the pathways for direct and indirect recognition of an ECAI and make minor stylistic and drafting changes. A notable substantive clarification is that the guidelines now expressly refer to insurers, as well as authorised deposit taking institutions, in describing who may rely on a recognised ECAI's ratings for capital purposes, reflecting that insurers also use ECAI ratings in practice even though the previous version of the guidelines was written primarily with banks in mind. APRA has not announced any change to the underlying capital adequacy standards that rely on ECAI recognition, such as the prudential standard governing credit risk capital requirements for authorised deposit taking institutions.

The update does not change which credit rating agencies are currently recognised, but it does clarify the basis on which recognition decisions are made going forward. It is relevant to authorised deposit taking institutions and insurers that rely on ratings from External Credit Assessment Institutions when calculating regulatory capital, and to any entity considering seeking ECAI recognition from APRA.