‘Red letter day’ for ag sector
Farmers are welcoming the announcement of two new bills to replace the under-fire Resource Management Act.
The swaps were sold in 2006-07 by some banks to farmers as insurance against interest rates - and hence floating rate farm mortgages - rising rapidly, farmers say.
But when the opposite happened, the farmers who bought them were left locked in to high interest rates which they could not escape without paying hefty break fees. Already heavily indebted, some farmers have lost their farms as a result of embracing interest rate swaps.
The Commission has received complaints primarily from the rural community alleging they were mis-sold the product by certain banks. In particular complainants allege that the nature and characteristics of the swaps were promoted in a way that was misleading.
The Commission has been assessing this information and has requested and received preliminary information from the banks and more detailed information is being sought.
"This is a very complex investigation and we are at an early stage. We have not yet formed a view as to whether the Fair Trading Act has been breached, however we do have sufficient concerns that we wish to probe further," said Commerce Commission chairman, Dr Mark Berry.
Many farmers claim to have suffered significant financial loss as a result of entering into the interest rate swaps.
"We have information from around 60 complainants at this stage, but will need more people to come forward if we are to form a complete picture of the issue," says Berry.
"We are not only interested in people who feel that they have been misled but also those who are satisfied with the way the product was sold to them."
The Commission is inviting affected farmers and others who may have been involved with swaps to read information on the Commission's website and complete a questionnaire at www.comcom.govt.nz/interest-rate-swaps
