Hexagon Properties Ltd (TC8468)
In 2007 the taxpayer borrowed £5m from a bank to refinance its existing debt and to finance property developments. At the same time it bought an interest rate hedging product (IRHP) from the bank. After the financial crash the effect of the product was to lock the company into artificially high effective interest rates. This affected its credit rating which prevented it completing the developments. The bank appointed receivers which further damaged the business.
The Financial Conduct Authority had become aware of mis-sold IRHPs and set up a redress scheme in agreement with several banks including the taxpayer’s. It offered to settle with the taxpayer but refused to pay more than £600 by way of redress for the taxpayer’s consequential losses. The taxpayer commenced proceedings for damages. These were settled by an agreement under which the taxpayer paid the bank £1.5m and the bank waived all...
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