Dairy prices continued to edge higher in last night’s Global Dairy Trade (GDT) auction with the aggregate price index up 0.4%.
The deal has been welcomed by Federated Farmers, but slammed by Labour Primary Industries spokesman Damien O’Connor.
The settlement will see ANZ establish a fund of $18.5 million, to be used to make payments to eligible customers, i.e. those who registered complaints with the commission.
The commission will also get $500,000 towards its investigation costs, and some money from the payment fund may be given to rural charities.
ANZ has also agreed to admit in High Court proceedings that it engaged in certain conduct that was misleading to some eligible customers over the marketing of interest rate swaps from 2005-2009. The commission will be seeking High Court declarations that the bank’s conduct breached the Fair Trading Act 1986. A hearing of that application is likely to take place early next year.
ANZ says it does not accept all the Commerce Commission findings but accepted some of the conduct was misleading and says settlement avoids lengthy delays of payments to customers.
The bank is contacting the 178 customers who may be eligible for a payment.
Federated Farmers has described the settlement as “a fair and equitable outcome” for rural customers. President William Rolleston says the agreement that the ANZ will pay compensatory payments to customers who believe they were misled by their interest rate swap contracts is the best outcome which could be expected.
“While some farmers found interest rate swaps a useful instrument, others felt they were not adequately informed of the risks should the market run against them. The global financial crisis created those unexpected and unfavourable conditions. Federated Farmers wrote to the Commerce Commission asking it to investigate and the outcome today vindicates our stance.”
Rolleston says the saga is a reminder to all farmers that they must be sure they understand contracts and they get independent advice.
Meanwhile, Labour’s Damien O’Connor says the commission found failings by the bank but then lets them off the hook with a paltry $18.5 million payment for total absolution.
“Even Mother Teresa would struggle with this level of forgiveness for a bank that between 2005 and 2009 pocketed $6 billion in pre-tax profits.
“They have eliminated any possibility of a further investigation into the selling of millions of swap loans by the ANZ to New Zealand farmers between 2005 and 2009.”
He says farmers were prevented from coming forward by confidentiality clauses in bailout packages when banks realised they were going to have to explain their swaps selling practices.
“In the UK and Australia, banks have been held to account for practices that were deemed misleading and unethical for lenders and investors who were ill equipped to understand these complex financial products. New Zealand has failed to do the same,” says O’Connor.