Fight for loan swap inquiry
An advocate for farmers whose businesses were damaged by loan swaps says she is acting on behalf of 183 people including more than 10 from Marlborough.
Janette Walker of the Manawatu said she had high hopes of a Commerce Commission inquiry into banks' marketing of loan swaps to farmers, which was at a preliminary stage.
There was nothing wrong with loan swap products based on fixing interest rates to protect against currency fluctuations, Ms Walker said. But complex products which worked well for big financial institutions employing financial experts were not appropriate for Rai Valley cow cockies busy running farms.
Banks targeted older farmers with swaps, some with succession plans for sons and daughters who were instead forced to sell farms to meet interest payments.
One man Ms Walker represented paid an extra $1 million interest over three years and was lucky to end up with a house.
"A lot feel ashamed and stupid to have signed up for something they didn't understand," Ms Walker said. "Some said they never gambled but now realise what they did was a huge gamble."
Several farmers told her bank representatives implied it was in their interest to take up loan swaps or support for their business would be reviewed. Those who signed did not understand swaps were not just a fixed rate but included a margin which could be changed at will, she said.
Banks promoting the products failed to recommend that clients sought independent advice, Ms Walker said. A disclaimer in small print well through agreement documents should not be regarded as a "get out of jail" card.
The heyday of rural loan swaps was 2006-07 when the dollar was reaching a peak, Ms Walker said. At road shows around the country, bank economists showed graphs illustrating interest rates going through the roof.
Ms Walker has high hopes of a Commerce Commission investigation into aspects of rural lending which she requested in the middle of last year. Ninety minutes after she sent the request the commission replied, she said.
Two investigators were employed on the matter and started working through documents requested from banks on January 3.
Banks no longer promoted loan swaps to farmers but many were still feeling the financial and emotional effects, she said.
Farmers affected by loan swaps can contact Ms Walker at 027 859 0281.
- The Marlborough Express