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

 

Interest Rates: RBNZ Hikes OCR To 3.5%, ‘Period Of Assessment’ Now Needed

Reserve Bank governor Graeme Wheeler raised the official cash rate as expected, while signalling a pause in rate hikes to assess the impact of moves so far this year. The kiwi dollar sank after Wheeler said its strength was “unjustified” and that the currency could have “a significant fall.” More>>

ALSO:

Fonterra: Canpac Site 'Resize' To Focus More On Paediatrics

Fonterra is looking at realigning its packing operations at Canpac, in the Waikato, to focus more on paediatric nutritionals... The proposed changes could mean around 110 roles may not be required at the site which currently employs 330. More>>

ALSO:

Scoop Business: Postie Plus Brand Gets 2nd Chance With Well-Funded Pepkor

The Postie Plus brand is getting a new lease of life after South Africa’s Pepkor bought the failed retailer’s assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins. More>>

ALSO:

Warming: Warming Signs From State Of Climate Report

Climate data from air, land, sea and ice in 2013 'reflect trends of a warming planet' -- says the latest State of the Climate report, launched by U.S. and New Zealand scientists. More>>

ALSO:

Scoop Business: Embrace Falling Home Affordability, Says NZIER

Despair over the inability to afford a house is misplaced and should be embraced as an opportunity to invest in more wealth-creating activity, says the principal economist at the New Zealand Institute of Economic Research, Shamubeel Eaqub. More>>

Productivity Commission: NZ Regulation Not Keeping Pace

New Zealand regulators often have to work with out-of-date legislation, quality checks are under strain, and regulatory workers need better training and development. More>>

ALSO:

Callaghan Innovation: Investment To Help Deepen Innovation Reporting

Callaghan Innovation, the government’s high tech HQ for Kiwi business, is to help deepen New Zealand media coverage of the commercialisation of innovation through an arms-length partnership with independent business news service BusinessDesk. More>>

ALSO:

Tax Credits, Grants: Greens $1Bn R&D Plan

In the Party’s headline economic announcement, the Greens have launched their plan to build a smarter, more innovative economy which has as its centrepiece an additional $1 billion of government investment in research and development (R&D) above current spend, including tax breaks for business. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

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