Independent local ratings agency, Australia Ratings has lowered the ratings it assigned to the AMP Subordinated Notes 2 and the AMP Capital Notes by two notches, down from 'A+' to 'A-', with dashboard colour coding of orange and red, respectively. (The colour codes relate to the relative complexity of the securities.)The ratings agency based its decision on the now notorious revelations from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services, noting the "severe" implications these hold for AMP's future earnings capacity. "Capital adequacy is likely to be strained as a result and AMP's future capacity to raise capital in need is open to question," said Australia Ratings' analyst Philip Bayley.AMP's reputation as a custodian of wealth may be irreparably damaged, and the on-going viability of AMP's advice business is also under threat as ASIC intends to ban grandfathered commission payments, which have been underpinning the viability of AMP aligned financial planners.Bayley: "Further rating action may be taken as greater clarity emerges around the extent of the damage done to AMP's financial position."Compounding the challenges confronting AMP, the group is facing the prospect of multiple class actions being initiated by aggrieved customers and a A$2 billion class action by shareholders was initiated last week.