Charlie McCreevy, the European Union internal market commissioner, on Tuesday warned the credit rating industry that it was “now on watch”, but he backed away from proposing a new regulatory framework for agencies.

The European Commission had been mulling a new law to regulate the credit rating sector, amid growing criticism of the agencies' performance in recent years. However, last week a European committee of national regulators urged the Commission to resist new legislation a piece of advice that Mr McCreevy said he would follow.