ASB agrees to an independent review over rural swaps
ASB agrees to an independent review of its processes over rural swaps
By Paul McBeth
June 22
(BusinessDesk) - ASB Bank, the local subsidiary of
Commonwealth Bank of Australia, has agreed to an independent
review into the way it sold rural interest rate swaps, and
will adopt any recommendations if it's found to have fallen
short.
The Auckland-based lender reached a settlement with the Financial Markets Authority to call in a third party to review the sale, promotion and marketing of the swaps to some customers, though doesn't accept it did anything wrong in its sale of the instruments.
In December, ASB cut
a deal with the Commerce Commission over the sale of the
swaps, agreeing to make $2.7 million available to compensate
the 40 eligible customers who registered their complaints
with the commission, pay $250,000 towards the commission’s
investigation costs and a further $250,000 to the Dairy
Women’s Network.
The FMA said it had concerns stemming from the commission's investigation over the way ASB marketed and sold the swaps, but didn't carry out a separate probe into the lender.
Today's settlement will see ASB hire a third party acceptable to both the bank and the FMA to review and report on whether the lender has processes and procedures in place to minimise the risk of making misleading statements when selling interest rate swaps and the ASB Term Fund. If the review finds ASB doesn't have reasonably appropriate processes in place, it can make recommendations the bank has to adopt by Dec. 18. The reviewer is also allowed to make non-binding recommendations if it wishes.
"This settlement recognises our concerns
about the imbalance of information that can exist between
customers and financial service providers," FMA general
counsel Liam Mason said in a statement. "The review will
also help to ensure robust sales and advice processes are in
place, including the disclosure of all relevant information,
and that they meet the standards of the new regulatory
framework."
The Commerce Commission investigation into
the sale of the swaps led to settlements with ASB, ANZ Bank
New Zealand and Westpac New Zealand, totalling compensation
payments of $24.2
million.
(BusinessDesk)