PRU 4.5.1

(1) When utilising external credit rating agencies as part of its credit assessment processes, an Authorised Person must:
(a) maintain an internal credit grading system; and
(b) stress test its capital position on at least an annual basis to consider the capital implications to the Authorised Person of a significant reduction in the credit quality and associated reduction on credit ratings from credit rating agencies for its credit portfolio.
(2) An Authorised Person must not solely use external credit rating agency credit ratings as a basis for its assessment of the risks associated with an Exposure, in particular in respect of a Large Exposure, and must at all times conduct its own credit assessment of such an Exposure.