The European Union plans to tighten the screws on rating agencies in a raft of new proposals including judicial action, issued amid concern over Standard and Poor’s erroneous downgrade of France.

Dubbing the S&P mistake “serious”, the EU’s Internal Market commissioner Michel Barnier said the incident underlined “that in the current tense and volatile market situation, market players must exercise discipline and demonstrate a special sense of responsibility”. Mr Barnier, who has been highly critical of agencies downgrading weaker eurozone members during Europe’s debt crisis, said he was specially surprised by an error at “one of the biggest ratings agencies, which as such has a particular responsibility”.

The event, he added, strengthened his conviction of the need for tighter rules across Europe, with proposed legislation to be unveiled in Brussels on Tuesday. Mr Barnier said in a statement that his proposals would touch on four areas – reducing reliance on ratings, increasing competition, increasing transparency in sovereign debt ratings, and toughening liability in case of misconduct.

As far as this week’s S&P error on France was concerned, Europe’s fledgling financial watchdog, the 2011-born European Securities and Markets Authority (ESMA) will “establish the facts and draw conclusions” with French authorities, Mr Barnier said.

France, which is fighting hard to retain its top rating in the face of pressure on its debt bonds, has reacted angrily, reinforcing wide criticism of the three big agencies, S&P, Moody’s and Fitch.