New Zealand Banks Mis-selling Interest Rate Swaps - Highlighting Deficiencies in Retail Customer Protection

In 2016, the first case to result from the mis-selling of interest rate swaps by New Zealand banks in the years just prior to the global financial crisis was heard. Due to certain peculiarities of New Zealand's contract law and the presence of a broadly worded exclusion of liability clause, no damages award was possible. This article looks at the decision in that case and concludes that an extension to the current unfair contract terms legislation is warranted. It also reflects on the existing system of industry self-regulation for banking conduct of business through a code of conduct. It discusses measures that could be adopted to improve code compliance in the broader interest of fostering confidence in the banking industry.