ANZ to pay $19 million in interest rate swaps case
The Commerce Commission has reached a $19 million settlement with ANZ Bank New Zealand Limited (ANZ) in relation to the
marketing, promotion and sale of interest rate swaps to rural customers between 2005 and 2009.
The settlement will see ANZ establish a payment fund of $18.5 million, to be used to make payments to eligible customers
(those who registered their complaints with the Commission). The Commission will also receive $500,000 towards its
investigation costs, and some monies from the payment fund are able to be distributed to charitable organisations for
the assistance of the rural community.
ANZ has also agreed to admit in High Court proceedings that it engaged in certain conduct that was misleading to some
eligible customers. 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.
The Commission’s investigation into ANZ looked primarily at whether the bank marketed interest rate swaps in a way that
may have misled customers as to their benefits, risks and suitability.
Commerce Commission Chairman Dr Mark Berry said, “The Commission considers that ANZ’s behaviour led some customers to
believe that margins on the loan connected with the swap would not change, early termination amounts would be similar to
break costs for equivalent fixed rate term loans, and that swaps would be for them a good substitute for a fixed rate
term loan. In reality, ANZ could, and in some instances did, increase margins, and early termination amounts could be
The Commission’s conclusions have not been tested in court and ANZ says that it does not accept them.
“We believe that this settlement is a very good outcome, as contested court proceedings would have meant uncertainty and
lengthy delays in achieving any possible payments. We are pleased to be able to deliver payments to eligible customers
much more quickly than might be achievable through the courts. The payments to be made under the settlement are, in our
view, a reasonable approximation of the potential losses that the Commission could have recovered on their behalf, if we
had been successful at trial. These payments will include amounts that eligible customers incurred by way of extra
margins and additional early termination amounts (for those who broke their swaps), or extra costs (for those who did
“We are also pleased that ANZ has put its hand up and admitted that some of its conduct was misleading.”
The Commission‘s settlement agreement sits alongside a separate agreement between the ANZ and the Financial Markets
“Over the next week we will be contacting the 178 customers who may be eligible for a payment under this settlement.
Payment offers will be made to these customers next year and we expect the funds to be distributed by the end of
September 2015,” said Dr Berry.
Discussions with the other two banks (Westpac and ASB) investigated by the Commission in relation to interest rate swaps