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Endowment selling made easy
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L&G challenges the FSA over endowments
INSURER Legal & General yesterday became the first major firm to
challenge an FSA fine for misselling endowment mortgages.
The FSA had fined the group £1.1 million for allegedly misselling
the policies between 1997 and 1999, claiming that they were sold to
people for whom they were not suitable because of problems in L&G’s
sales and compliance procedures.
As a result, it said people bought the policies who were not willing to
accept the risks associated with them. But an L&G spokesman said
yesterday the group "strongly denies it was guilty of systemic misselling".
The FSA has not said how many policies it believes were missold,
but during the period L&G was one of the largest providers of
endowment mortgages.
The case will be heard by the Financial Services and Markets Tribunal,
which does not pass judgment on the FSA’s decision but listens to a case
and then recommends what action should be taken. It will be the tenth
hearing since the FSA gained its powers in 2001.
The hearing is expected to last six weeks, in which time evidence will
be heard from customers who bought policies during the period, as well
as staff from the FSA and L&G.
The FSA began an in-depth analysis of endowment mortgage sales in
1999. The biggest fine it has levied on the issue was £2m on Royal
Scottish Assurance, while Abbey Life has been fined £1m. At the end of
March, firms had received more than 450,000 complaints about misselling
and have set aside or paid out nearly £1 billion of compensation.
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