The Commerce Commission says it will widen its investigation into interest rate swaps sold by banks to farmers and businesses.
Commerce Commission chairman Mark Berry today updated Parliament's Primary Production select committee on the Commission’s progress on the issue.
"In August 2012 the Commission began enquiring into whether interest rate swaps, a financial derivative product, were misleadingly marketed from 2005 onwards. The Commission has received 42 complaints since concerns were raised in the media," said Berry.
“The investigation is at an early stage, but we are giving the issues full consideration. To date we have spent more than 1,000 staff hours on the investigation."
He said the Commission was primarily considering whether the swaps were marketed in ways that may have misled customers as to their true risk, nature and suitability.
"The Commission has already received a large amount of information from complainants and from banks. Shortly the Commission will widen its enquiries by seeking further information from people who have entered into interest rate swaps," Berry added.
Interest rate swaps are a financial derivative product that allows a client to manage their interest rate exposure on their borrowing. They were principally provided to large corporate and institutional customers, but from 2005 were offered to rural and commercial clients throughout New Zealand by various banks.
The Fair Trading Act
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