ANZ was singled out as the most aggressive of the banks that sold the interest rates swap products. Photo / NZ Herald
ANZ was singled out as the most aggressive of the banks that sold the interest rates swap products. Photo / NZ Herald
A handful of farmers who bought interest rate swaps have refused to settle and take a payout from the three banks which sold them the financial products.
ANZ, ASB and Westpac all reached a deal with the Commerce Commission and made narrow admissions that some of the behaviour over the swaps was misleading to some customers.
The out-of-court agreement followed an investigation by the regulator into whether the swaps were being misleadingly marketed.
The settlements meant that $24.5 million will go back to some affected rural customers and their communities via charities. These payments have now been made, the commission said yesterday.
More than 97 per cent of 253 affected farmers settled with the banks but a handful of those eligible for cash payout refused it.
Others were not offered a cash payment, with their settlement amount to be offset against debt and either declined the offer or did not respond to it, the commission said.
Commerce Commission chairman Mark Berry said it was a good outcome.
Commerce Commission chairman Mark Berry. Photo / Mark Mitchell
"Being able to deliver the payments now, compared with farmers otherwise facing lengthy and uncertain court proceedings, is a good outcome. We are happy to say the settlement process has been completed and we are pleased to see that charities that assist farmers in difficult circumstances are receiving a meaningful benefit from this case," Berry said.
ANZ was seen as the most aggressive of the banks that pitched the swaps and was singled by the commission which got a High Court declaration that the bank breached the Fair Trading Act.
One possible reason a few farmers have refused to take the settlement offer is that those who do so waive the rights to take legal action against the banks.
While the Herald has heard of some who have been mulling lawsuits, a class action mooted earlier this year never got off the ground.
The interest rate swaps saga is likely to remain a sore point in rural areas, given some people who entered into the transactions lost their farms.
WHAT ARE INTEREST RATE SWAPS? • Interest rate swaps are a financial product that can allow borrowers to manage their interest rate exposure. • Between 2005 and 2009, a number of New Zealand banks marketed and negotiated hundreds of millions of dollars of swaps contracts to their clients. • Three banks' dealings with rural customers over the swaps came under the spotlight of the Commerce Commission and the FMA, which together settled with ANZ, ASB and Westpac. • The trio of financial institutions paid more than $24 million in the settlements.
