Press Release – Commerce Commission
Commerce Commission Chairman Dr Mark Berry has today provided an update to the Primary Production select committee on the Commissions progress in its interest rate swaps investigation.
Commission updates Primary Production select committee on interest rate swaps investigation
Commerce Commission Chairman Dr Mark Berry has today provided an update to the Primary Production select committee on the Commission’s progress in its interest rate swaps investigation.
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.
“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,” Dr Berry said.
The Commission is 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.
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
Businesses found guilty of breaching the Fair Trading Act may be fined up to $200,000 for each charge. Where more than one charge is laid, the court may impose a fine greater than $200,000. Only the courts can decide if a representation has breached the Fair Trading Act.