ComCom to issue proceedings against ASB, ANZ, Westpac over interest rate swaps
The Commerce Commission intends to issue legal proceedings against three of the major Australian banks over their sale of interest rate swap contracts to farmers, which the regulator says may have breached the Fair Trading Act.
The commission intends to file proceedings against ASB Bank, ANZ Bank New Zealand, and Westpac New Zealand in March next year, and is also looking at other institutions which sold the swaps, chairman Mark Berry said in a statement. The regulator has told the banks it thinks there is sufficient evidence the banks breached legislation, citing sections of the act relating to misleading and deceptive conduct generally, misleading conduct in relation to services, and false or misleading representations.
"We have advised the banks of our views that swaps were misrepresented to rural customers," Berry said. "I expect to have more talks with the banks about these views, and about the different facts that might apply to each of them, over the coming months."
The swaps allow clients to manage the interest rate exposure on their borrowing and are typically marketed to large corporations and institutions. However, from 2005 banks began marketing them to their rural and commercial clients.
The commission began its probe in August last year and has received 42 complaints since concerns over the way the financial derivatives were sold first aired in the media.
The regulator said it will make no further comment because of the pending court proceedings.