Legal & General Challenges FSA Mis-Selling Verdict

by Robin Pilgrim, LawAndTax-News.com, London

24 May 2004

Insurance firm, Legal & General on Thursday accused the UK's Financial Services Authority (FSA) of "unfair and oppressive" behaviour over the endowment mis-selling verdict that it handed down to the insurer.

The decision was reached following the publication of a PricewaterhouseCoopers report which found that of 250 Legal & General customers surveyed, 60 were sold unsuitably risky products.

Representing the FSA at the preliminary Financial Services and Markets Tribunal hearing, Hodge Malek announced:

"That is a massive failure rate and a symptom of a broader problem. We are saying there was a much wider problem."

According to reports in the UK media, although the FSA has fined several insurance firms for mis-selling endowment mortgage policies, only Legal & General has challenged the verdict.

Speaking at the hearing on Thursday, L&G's lawyer suggested that the financial services regulator could not prove its allegations on the basis of the evidence held, arguing that:

"It is implicit in the FSA's stance that the case...in respect of which it imposed a penalty of £1.1 million, could not actually be proved by the evidence on which the FSA relied in making that decision."

However, Mr Malek responded by explaining:

"They are saying: 'All your evidence is the PwC report'. We are saying: 'No it is not'. We are going to call on customers, we are going to call on the underlying documents and we will be calling an expert."

The date for a four week hearing on the matter has been set for September.

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