Kaikoura MP Colin King and Green MP Steffan Browning of Marlborough have welcomed a Commerce Commission investigation into whether banks breached the Fair Trading Act by misleading marketing of complex interest rate swaps to farmers.
Mr King and Mr Browning sit on Parliament's primary production select committee which is considering doing its own investigation into the swaps at the request of Labour primary industries spokesman and West Coast-Tasman MP Damien O'Connor.
Mr Browning said a parliamentary inquiry could consider whether clients signed contracts under duress, which was outside the Commerce Commission brief.
"It's a concern how much clients . . . had their arms twisted behind their backs to accept these clearly harsh loan swaps," he said.
Also, parliamentary privilege would protect people scared of talking because of confidentiality agreements with banks, Mr Browning said.
Janette Walker, who represents interest swap victims, said four Marlborough vineyard owners contacted her after she was quoted in the Marlborough Express last week. Ms Walker slammed Federated Farmers president Bruce Wills for criticising swaps products last week when previously he ignored the problem.
She asked Federated Farmers and Beef + Lamb in July last year to create a portal for farmers with interest swaps problems on their websites but they refused.
Many farmers signed swaps agreements under duress, she said. One who rang last week said the bank manager turned up the day his four- to five-year swaps agreement ran out and said unless it was renewed, he would not sleep at night.
The day after making a verbal agreement to extend, the farmer changed his mind but the bank said the agreement was binding, and insisted he sign.
The Commerce Commission said so far 42 complaints had been received involving three banks which it did not name.
Commission chairman Mark Berry told the committee if it found the swaps were marketed misleadingly, banks would have to decide whether to settle or be taken to court.
The issue had major implications for primary sector financing where debt ran close to $50 billion, he said.
Swaps allow clients to manage the interest rate exposure on borrowing and are typically marketed to large corporations and institutions. After the global financial crisis, interest rates plunged to historic lows and holders found themselves locked into interest rates of up to 10 per cent, with punitive break fees if they tried to exit.
The case has parallels with Britain where banks were reportedly forced to sell more than $1b in assets to compensate clients for similar loan swap losses.
Source: http://www.stuff.co.nz/marlborough-express/news/8377427/Did-the-banks-act-fairly
Buy a book to learn more about Interest Rate Swaps!
Mr King and Mr Browning sit on Parliament's primary production select committee which is considering doing its own investigation into the swaps at the request of Labour primary industries spokesman and West Coast-Tasman MP Damien O'Connor.
Mr Browning said a parliamentary inquiry could consider whether clients signed contracts under duress, which was outside the Commerce Commission brief.
"It's a concern how much clients . . . had their arms twisted behind their backs to accept these clearly harsh loan swaps," he said.
Also, parliamentary privilege would protect people scared of talking because of confidentiality agreements with banks, Mr Browning said.
Janette Walker, who represents interest swap victims, said four Marlborough vineyard owners contacted her after she was quoted in the Marlborough Express last week. Ms Walker slammed Federated Farmers president Bruce Wills for criticising swaps products last week when previously he ignored the problem.
She asked Federated Farmers and Beef + Lamb in July last year to create a portal for farmers with interest swaps problems on their websites but they refused.
Many farmers signed swaps agreements under duress, she said. One who rang last week said the bank manager turned up the day his four- to five-year swaps agreement ran out and said unless it was renewed, he would not sleep at night.
The day after making a verbal agreement to extend, the farmer changed his mind but the bank said the agreement was binding, and insisted he sign.
The Commerce Commission said so far 42 complaints had been received involving three banks which it did not name.
Commission chairman Mark Berry told the committee if it found the swaps were marketed misleadingly, banks would have to decide whether to settle or be taken to court.
The issue had major implications for primary sector financing where debt ran close to $50 billion, he said.
Swaps allow clients to manage the interest rate exposure on borrowing and are typically marketed to large corporations and institutions. After the global financial crisis, interest rates plunged to historic lows and holders found themselves locked into interest rates of up to 10 per cent, with punitive break fees if they tried to exit.
The case has parallels with Britain where banks were reportedly forced to sell more than $1b in assets to compensate clients for similar loan swap losses.
Source: http://www.stuff.co.nz/marlborough-express/news/8377427/Did-the-banks-act-fairly
Buy a book to learn more about Interest Rate Swaps!
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