Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Federated Farmers awaits examination of swaps


27 February 2013

Federated Farmers awaits Commerce Commission examination of swaps

Federated Farmers has asked the Commerce Commission to look into the selling of debt finance instruments known as ‘swaps’. This formal request was made last November.

“It is fair to say we have received a number of inquiries from members and even non-members regarding swaps,” says Bruce Wills, Federated Farmers President.

“As most of these instruments were sold to farmers between 2007 and 2009, the impact of the global financial crisis upon interest rates saw concerns really only arise after 2009.

“While personal responsibility means poor decision making is no defence, Federated Farmers will not excuse the wilful misselling of any product; financial or otherwise. This explains why we asked the Commerce Commission last November to look into swaps and how they were sold.

“Speaking as a former banker swaps are incredibly complicated instruments. You certainly only go into them after independent advice to ensure they are appropriate to your needs.

“I think the issue is less the product but the way they were sold.

“Most farmers do not use swaps and the product is still being sold right across the commercial spectrum. We have to be careful not to throw the baby out with the bathwater because I receive calls from farmers who rate swaps highly.

“Federated Farmers believes legitimate concerns need to be resolved. If there is fire where there is smoke the Commerce Commission is best placed to find it.

“It is also worth remembering what we told the Labour-led Opposition banking Inquiry in August 2009; “We have also received reports from our members that margins have been changed on fixed term swap rates and that loan contract clauses might have been changed last year to enable this to happen. There appears to be considerable confusion about ‘swaps’, with them being sold to farmers as though they are fixed rate products: one of our survey respondents wrote “they have mentioned they can change the margin on our swap which wasn’t mentioned when we signed up. It was sold to us more like a fixed loan”.

“In December 2010, in our submission to the Review of the Code of Banking Practice, we further said; “A number of farmers have expressed concern to us about confusion over products such as swaps. Many farmers (and even their advisors) misunderstood swaps and were unable to take advantage of lower interest rates from late 2008 without paying excessively high break fees”.

“Federated Farmers has close contact with all the major lenders and the New Zealand Bankers Association. We are assured issues with swaps are being worked through on an individual basis.

“We also hope the Commerce Commission will be able to examine them too. It is best placed to bring clarity to what has become a controversial financial instrument,” Mr Wills concluded.

You can view Federated Farmers letter to the Commerce Commission here.
ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Scoop Business: Productivity Commission To Look At Housing Land Supply

The Productivity Commission is to expand on its housing affordability report with an investigation into improving land supply and development capacity, particularly in areas with strong population growth. More>>

ALSO:

Forestry: Man Charged After 2013 Death

Levin Police have arrested and charged a man with manslaughter in relation to the death of Lincoln Kidd who was killed during a tree felling operation on 19 December 2013. More>>

ALSO:

Smells Like Justice: Dairy Company Fined Over Odour

Dairy company fined over odour Dairy supply company Open Country Dairy Limited has been convicted and fined more than $35,000 for discharging objectionable odour from its Waharoa factory at the time of last year’s ”spring flush” when milk supply was high. More>>

Scoop Business: Dairy Product Prices Decline To Lowest Since July 2012

Dairy product prices dropped to the lowest level since July 2012 in the latest GlobalDairyTrade auction, led by a slump in rennet casein and butter milk powder. More>>

ALSO:

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news