17 Feb 2015

Westpac settles over interest rate swap complaints

2:44 pm on 17 February 2015

Westpac Bank will pay $3 million after becoming the third bank to settle with the Commerce Commission over interest rate swap products that some farmers claimed were misleading.

The Australian-owned bank admitted it breached the Fair Trading Act and will pay $2.5 million to 38 farmers, as well as $250,000 in costs and another $250,000 to rural support trusts.

Late last year, the regulator reached compensation settlements with ANZ for $19 million and ASB Bank for a little over $3 million.

The Commission believed Westpac misled some customers by giving the impression that margins on interest rate swaps loans would not change during the life of the loan, when the margins did increase in some instances.

Westpac also settled with the Financial Markets Authority.

The authority's legal counsel, Liam Mason, said Westpac would have two of its products independently reviewed and it must abide by any recommendations.

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