FMA joins probe into interest rate swap sales to farmers
FMA investigates whether banks breached financial markets laws on interest rate swaps to farmers
April 24 (BusinessDesk) – The Financial Markets Authority, New Zealand’s markets watchdog, is investigating whether the sales and marketing of interest rate swaps by major banks to rural customers may have breached financial markets laws.
The FMA is working with the antitrust regulator, the Commerce Commission, to see if the banks have breached laws including the Securities Act 1978 and the Securities Markets Act 1988, the watchdog said in a statement. It declined to comment further while the investigation is ongoing.
The Commerce Commission began its probe in 2012 on concern banks had misrepresented swaps to rural customers and has said it plans to file legal proceedings against the Australian-owned ASB Bank, ANZ Bank New Zealand and Westpac New Zealand, citing possible breaches of the Fair Trading Act, and said it was also looking at other institutions which sold the swaps.
Interest rate swaps allow clients to manage the interest rate exposure on their borrowing and are typically marketed to large corporations and institutions. From 2005, banks began marketing them to their rural and commercial clients and the Commerce Commission has received more than 140 complaints about the way the financial derivatives were sold.