Insurer sees endowment fine cut

The Financial Services and Markets Tribunal, which reviewed L&G's appeal, said L&G was guilty of mis-selling. However, the tribunal did not agree with the FSA about the extent of the firms' mis-selling. As a result, the tribunal said that the fine should be cut and it would decide at a later date by how much.

The FSA fine related to Legal & General's sale of endowments between 1997 and 1999. The FSA found that Legal & General had failed to fully inform some customers of the full risks of investing in endowments.

In response, Legal & General said it had "proper and reasonable sales and compliance procedures in place," and appealed to the tribunal, which has the power to overturn the FSA's decision.

This is the first time a major bank or insurer has taken the City regulator to the tribunal. The insurer alleged during its submission to the tribunal that the FSA investigation had been unfair.

The tribunal concluded that mis-selling had taken place but in far fewer cases than had been presumed by the FSA investigators.

As a result, the tribunal said that the fine imposed on Legal & General should be reduced.

Full story http://news.bbc.co.uk/1/hi/business/4183729.stm

Jan 18, 2005
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