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

 

Scoop Business: Equity Crowd Funding Carries Risks, High Failure Rate

Equity crowd funding, which became legal in New Zealand this month, comes with a high risk of failure based on figures showing existing forays into social capital have a success rate of less than 50 percent, one new entrant says. More>>

ALSO:

Scoop Business: NZ Migration Rises To 11-Year High In March

The country gained a seasonally adjusted 3,800 net new migrants in March, the most since February 2003, said Statistics New Zealand. A net 400 people left for Australia in March, down from 600 in February, according to seasonally adjusted figures. More>>

ALSO:

Hugh Pavletich: New Zealand’s Bubble Economy Is Vulnerable

The recent Forbes e-edition article by Jesse Colombo assesses the New Zealand economy “ 12 Reasons Why New Zealand's Economic Bubble Will End In Disaster ”, seems to have created quite a stir, creating extensive media coverage in New Zealand. More>>

ALSO:

Thursday Market Close: Genesis Debut Sparks Energy Rally

New Zealand stock rose after shares in the partially privatised Genesis Energy soared as much as 18 percent in its debut listing on the NZX, buoying other listed energy companies in the process. Meridian Energy, MightyRiverPower, Contact Energy and TrustPower paced gains. More>>

ALSO:

Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>

ALSO:

Houses (& Tobacco) Lead Inflation: CPI Up 0.3% In March Quarter

The consumers price index (CPI) rose 0.3 percent in the March 2014 quarter, Statistics New Zealand said today. Higher tobacco and housing prices were partly countered by seasonally cheaper international air fares, vegetables, and package holidays. More>>

ALSO:

Notoriously Reliable Predictions: Budget To Show Rise In Full-Time Income To 2018: English

This year’s Budget will forecast wage increases through to 2018 amounting to a $10,500 a year increase in average full time earnings over six years to $62,200 a year, says Finance Minister Bill English in a speech urging voters not to “put all of this at risk” by changing the government. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news