After the Financial Crisis, once the actions of the leading credit rating agencies were brought to light, the sense of scepticism and suspicion regarding the actual operating policies of the agencies was at an all-time high. As such, a number of their practices have been scrutinised by onlookers with the view of determining their usefulness, their role, and their overall worth. The most recent example of this can be seen in the recent concerns raised within the business media, and from across the marketplace within certain sectors, regarding how the agencies are viewing something known as ‘add-backs’. In this post we will learn more about these concepts, and evaluate the concerns and their validity. In May, Reuters ran with a story entitled ‘ US investors sound alarm over projected add-backs ’, whilst only on Friday the Financial Times ran with the headline ‘“Add-backs” stoke fears of distorted credit ratings ’. The rating agencies have responded to this issue, with S&P p...

The issue of short-term lending and its connection to the post-Crisis era has been discussed on a number of occasions here in Financial Regulation Matters , most notably here and here . We discussed how the growth in this particular market was borne out of a desperation experienced by citizens who were, for the most part, struggling to make ends meet. One of the largest players in that field was Wonga, set up in 2006 just before the Crisis hit the Western world. In this post, we will look at Wonga’s recent collapse and discuss what its collapse may mean, both for consumers and the marketplace moreover. In a previous post we discussed how, in June 2017 the Financial Ombudsman revealed that consumer complaints against Wonga and other similar lenders had exploded by 227% . That increased rate of complaints has subsequently been cited as being one of the core reasons behind Wonga’s recent collapse. The Guardian notes how the company ‘ collapsed into administration after it was bro...