Farmers to decide whether to accept payout after bank admits misleading conduct over interest rate swaps.

ANZ has admitted misleading conduct over interest rate swaps and up to 178 farmers will now have to decide whether to accept their share of $18.5 million from the bank.

An advocate for farmers who entered into the swaps, Janette Walker, believed the deal "didn't even come close" to covering the losses suffered and said the amount each would get was "pathetic".

"Some of these people lost their farms, they lost everything," she said.

Walker said there could be the opportunity for a class action.

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Federated Farmers described the settlement between ANZ and the Commerce Commission as "a fair and equitable outcome".

The commission - which probed ANZ's conduct around the swaps, believed it was misleading, and negotiated a settlement with the bank - said payments under the deal were in the order of what it could have recovered if there had been a successful trial.

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Between 2005 and 2009, a number of New Zealand banks marketed and negotiated the swaps, which are a financial derivative product that allows borrowers to manage the interest rate exposure on their borrowing.

The commission in 2012 began probing whether these swaps were being misleadingly marketed and yesterday said it was still in discussions with two other banks it investigated, Westpac and ASB.

The settlement with ANZ means it will pay $18.5 million which will be distributed to the affected customers who complained to the regulator.

The amount will differ from customer to customer and is based on a confidential methodology. Any customer who accepts payment will waive legal rights against ANZ in respect of swaps purchases.

See this morning's Commerce Commission announcement here:

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While the regulator said ANZ's conduct was likely to be misleading and that some rural customers may have suffered loss a result, the bank said the commission's conclusions have not been tested in court.

ANZ said many of the customers named in the settlement were sophisticated business people and had access to legal advice.

It also believed it would not be liable for "any fines, penalties, refunds or damages at law".

That notwithstanding, ANZ admits "it engaged in certain conduct that was misleading" to some of the customers named in the settlement.

Under yesterday's agreement, the commission will apply to the High Court this month for orders that ANZ's admitted conduct had breached the Fair Trading Act.

ANZ is not to oppose the court making this declaration.

The bank also reached a settlement yesterday with the Financial Markets Authority, which earlier this year began its own investigation into interest rate swaps.

The market watchdog said it too believed ANZ's conduct over the sale and marketing of the swaps to some rural customers was misleading.

As part of the FMA settlement, ANZ will provide it with undertakings about its future conduct and engage a review of its processes for sales and marketing of the swaps and forex foward contracts.

See the full settlement agreement and enforceable undertakings here.