Providers blast credit rating system after HBOS fall

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The abrupt falls of both Lehman Brothers and HBOS have highlighted the shortcomings of the credit rating system, providers warn.

They argue the methods of agencies including Standard & Poor's (S&P's), Fitch and Moody's "have been found out" after they failed to adequately warn investors and advisers of the firms' impending troubles. However, providers agree the task for advisers to assess an investment's true risk remains extremely difficult, adding credit ratings can often provide a useful guide. Lehman Brothers Holdings was rated 'A' long term and 'A-1' short term by S&P's as recently as 10 September, just four days before the firm filed for bankruptcy. Earlier this year, HBOS was rated 'A+' by S&P, 'Aa2' ...

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