Swap loan sales court action a 'battle won'
In a war that has cost her a lifetime of work, former north Taranaki farmer Angela Potroz says she has finally won a battle.
Yesterday the Commerce Commission announced that they intended to take ANZ, ASB and Westpac banks to court for "misrepresenting" sales of interest rate swap loans to rural customers.
Mrs Potroz and her husband John were some of the hundreds of farmers persuaded by The National Bank (now branded ANZ) to take the financial product in 2007 as a way to "beat" rising interest rates.
Nearly inexplicable to all but financial experts, the products were often sold to farmers as being fixed rate loans "with benefits".
But when the global economy fell apart interest rates on the swaps soared and fine print penalty clauses kicked in.
With the bank refusing to offer the Potrozes any relief and refinancing costs in the millions, the couple said they were doomed to fail.
In November 2012 they sold four sheep and beef farms valued at $18.85 million in 2010 for just $12.08m after the bank demanded their $11m swap be repaid in full.
"Someone said they did wrong. It wasn't that we were stupid people who got greedy. This justifies that we were ripped off. For me that battle is won," Mrs Potroz said of the commission's decision.
"If it goes to court that is the next battle. As for what I would like to see happen, that is hard to say.
"We have lost everything, our way of life, who we are. There is no good outcome. It's too late for us but maybe not others."
The pair are believed to be just one of about 200 Taranaki farmers who used the product.
In March a former banker speaking on condition of anonymity told the Taranaki Daily News many farmers had agreed to gagging clauses in deals offered by banks to exit the loans.
Others are understood to have sold up when threatened with foreclosure.
The investigation into the loans was started by the Commerce Commission last November. They believe there is sufficient evidence that the banks have breached sections 9, 11 and/or 13 of the Fair Trading Act.
These sections relate to misleading customers.
"This has been an extensive and complex investigation, but that phase of it is almost at an end. We have advised the banks of our view that swaps were misrepresented to rural customers," said commission chairman Mark Berry.
A spokesperson for ANZ, which owned The National Bank and rebranded it as ANZ last year, said the issue related to some rural interest rate swaps mostly sold by The National Bank to large farming enterprises before the global financial crisis when international events led to interest rates suddenly dropping by unprecedented levels.
Westpac's external relations manager Chris Mirams said it was difficult for the bank to respond given the generality of the commission's statements and the absence of any specific information from the commission regarding Westpac's activities.
"Should proceedings be brought against Westpac, they will be vigorously defended."
A spokesperson for ASB said because the commission had indicated that it would start court proceedings it was unable to comment on their claims.
However, like the other two banks they said they would continue to co-operate with the commission's on-going investigation.
Taranaki Daily News