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

 


Commerce Commission working on interest rate swap probe

Commerce Commission still working on probe of sale of interest rate swaps

Feb. 28 (BusinessDesk) – The Commerce Commission says it is still working on its investigation into whether interest rate swaps were misleadingly marketed after claims from farmers that they got locked into confusing contracts with excessive break fees.

The commission began its probe in August last year and has received 42 complaints since concerns over the way the financial derivatives were sold first aired in the media, chairman Mark Berry told Parliament’s primary production select committee.

The swaps allow clients to manage the interest rate exposure on their borrowing and are typically marketed to large corporations and institutions. However, from 2005 banks began marketing them to their rural and commercial clients.

Farmer lobby Federated Farmers was among groups seeking a review by the regulator, saying the instruments were mostly sold to its members between 2007 and 2009, with concerns about them only surfacing in the wake of the global financial crisis.

Fed president Bruce Wills called the swaps “incredibly complicated instruments.” Farmers had reported that margins had been changed on fixed term swap rates and that loan contract clauses might have been changed to allow that to happen.

“There appears to be considerable confusion about swaps, with them being sold to farmers as though they are fixed rate products,” Wills said. While farmers had to take responsibility for their financial decisions, the lobby group “will not excuse the wilful mis-selling of any product, financial or otherwise.”

Not many farmers use swaps and some that do rate them highly, he added.

Labour’s primary industries spokesman Damien O’Connor said last week that “the practice of selling complicated finance products to farmers has been far more extensive than previously stated.”

“This is a serious issue that needs careful consideration because it has major implications for primary sector financing where debt currently runs at close to $50 billion,” he said.

The commission’s Berry said his investigation’s primary aim is to establish whether the swaps were marketed “in ways that may have misled customers as to their true risk, nature and suitability.”

The regulator had received a large amount of information from complainants and banks and will shortly widen its inquiries, seeking further information from people who have entered into interest rate swaps.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Insurers Up For More Payouts: Chch Property Investor Wins Policy Appeal In Supreme Court

Ridgecrest NZ, a property investor, has won an appeal in the Supreme Court over insurance cover provided by IAG New Zealand for a Christchurch building damaged in four successive earthquakes. More>>

ALSO:

Other Cases:

Royal Society: Review Finds Community Water Fluoridation Safe And Effective

A review of the scientific evidence for and against the efficacy and safety of fluoridation of public water supplies has found that the levels of fluoridation used in New Zealand create no health risks and provide protection against tooth decay. More>>

ALSO:

Scoop Business: Croxley Calls Time On NZ Production In Face Of Cheap Imports

Croxley Stationery, whose stationery brands include Olympic, Warwick and Collins, plans to cease manufacturing in New Zealand because it has struggled to compete with lower-cost imports in a market where the printed word is giving way to electronic communications. More>>

ALSO:

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Igniting The Spark: Bringing The Digital Enabler To Life

Changing a name is, relatively speaking, the easy part of a re-invention. Changing a culture, getting all the ducks in a row, turning yourself inside-out to become customer-inspired is a much bigger challenge. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

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