Commerce Commission files proceedings against Westpac
The Commerce Commission has announced that it has filed proceedings against Westpac New Zealand.
O'Connor says the decision has been a long time coming and so-called swaps loans were misrepresented to rural customers.
"This move by the Commerce Commission is an important step forward in finding out what effect these banking products have had on rural New Zealand," says O'Connor.
"I must also acknowledge the advocacy work by (Wairarapa farmer) Jeanette Walker who was determined to seek justice for the many farmers who found themselves in difficult situations as a result of these swaps loans. Without her tireless commitment it is doubtful the Commission would have initiated this inquiry.
"In simple terms, a swaps loan is a type of fixed rate loan, sold to farmers as a way to manage their interest rate risk. What many were not told was that the bank could increase its margins if they considered the farmer became high risk. This has put some famers under huge financial pressure.
"Farmers are losing their farms as a result of hard sell tactics by banks who have locked them into high interest rates they can't escape unless they pay hefty break fees.
"These tactics have destroyed the important trust relationship that needs to be built between the rural sector and banks as partners in farming for the future."
