Commerce Commission is defending its settlement with the Westpac Bank over interest rate swaps.
The bank was one of three the Commission investigated following farmer complaints that they were misled about the risks involved in using swaps to manage their exposure to interest rates.
Some say it cost them their farms.
The Commission said Westpac admitted that some of its conduct breached a section of the Fair Trading Act.
But the bank has avoided court action by agreeing to pay almost $2.5 million compensation to 38 of its rural customers who registered complaints. It will pay another $500,000 in costs and make a contribution to Rural Support Trusts.
Commerce Commission chair Dr Mark Berry said the settlements with Westpac, and the other two banks it investigated, ANZ and ASB, were a good result for the farmers concerned.
"We could have gone to court and there would have been some years of litigation and, at the end of that, if we had succeeded, there would have been a penalty imposed against the banks.
"But our assessment was that it was unlikely that the farmers would get compensation, or any significant compensation out of going down that path."
Dr Berry said the Commission considered that the farmers had gained more from the settlements it negotiated with the the banks, with the 250 or so eligible farmers receiving about $24 million compensation.
However, this has been challenged by Labour Primary Industry spokesperson, Damien O'Connor.
"The Commerce Commission's role is not to sit in judgement of the law, it's actually to implement it.
"What has disappointed me is firstly the small amount of money that has gone from the banks back to some farmers, when there are hundreds and hundreds of others who have not gone to the Commerce Commission.
"In fact, the outcome is that the banks have effectively purchased their way out of justice and I think the Commerce Commission has been rather pathetic, and, to use a farming term, they're about as useless as tits on a bull."
Meanwhile, debt mediator and rural advocate Janette Walker, one of the first to raise the swaps issue, is now talking to lawyers about a class action against the three banks the Commerce Commission investigated.
She said the total amount of about $24 million agreed to in the three settlements was only a very small proportion of the total cost to the estimated 1500 farmers who took swaps options.
However, Federated Farmers president Dr William Rolleston said the agreements are a fair and equitable solution and it is time to move on.