Farmers will be able to speak to the Commerce Commission in confidence over the sale of controversial interest rate swaps, a Parliamentary select committee was told today.

But the commission is less sure whether it will be able to prosecute unless some of those affected are prepared to be identified.

The commission was asked to update the primary production select committee on its early-stage investigation into the complex bank products, and whether those who bought them understood them or were misled.

Labour MP and committee member Damien O'Connor said the heart of the matter was whether the committee should also hold an investigation, because he had heard some farmers were afraid of ruining their chances of a loan adjustment if they went public.

"I have heard that banks would prefer to go through a Commerce Commission inquiry rather than a parliamentary inquiry," he said.

"We have the ability to hear their evidence in private and protect their identity."

Commission chair Mark Berry assured MPs that "we will hear farmers in confidence ... and we will not divulge that information to the banks".

But anonymity also meant the committee might not be able to use that information if the matter reached the courts.

The commission's general counsel on competition, Mary-Anne Borrowdale, said it became problematic if the commission was seeking compensation for an individual in a court of law. .

So far three banks are being investigated and 42 complaints have been received about the swaps, which were sold before and during the global financial crisis.

It is understood the swaps were sold to farmers as a way of hedging against rising interest rates, but when interest rates fell to historic lows, swap-holders were left locked into crippling loan repayments.

Those affected are reported to be paying interest rates about 10 per cent, with punitive break fees if they tried to exit.

The banks involved, including Westpac and ANZ, have refused to say how many swap loans they sold.

But pushed to put a dollar value on the magnitude of the problem, the Commerce Commission's general manager of competition Kate Morrison said she had to assume there were "more than tens of millions" of dollars involved.

However, sources said the figure runs into the billions of dollars.

- © Fairfax NZ News