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CA says using WP funds to pay for misselling is tantamount to &#39theft&#39

The Consumers&#39 Association is warning the FSA it could be allowing corporate theft if it permits life offices to use with-profits funds to pick up the bill for mortgage endowment misselling.

The CA says the majority of the six million with-profits policyholders are already suffering from mortgage endowment shortfalls and argues shareholders of proprietary offices should be the ones who meet the cost of any compensation.

Itsays there should be no repeat of the payment from with-profits funds to meet a proportion of the £13bn pension misselling and is calling on the FSA to make a clear statement to the industry that shareholders carry the financial responsibility for mortgage endowment misselling.

It believes that, without a clear statement to this effect, the FSA will be failing to protect consumers who are already suffering financially.

CA director general Sheila McKechnie says: “This industry is taking consumers for a ride. Not only have they missold them unsuitable products, which are failing to meet the mortgage target, they are now expecting these poor consumers to foot the bill for industry wrong-doing. It is a simple question of arithmetic, every pound used to bail out shareholders is a pound that cannot be used by policyholders to pay off their shortfalls. The FSA cannot allow the industry to get away with corporate theft.”

FSA spokesman Rob McIvor says: “We have acted to address the issue of fines being paid from policyholders&#39 funds, which is no longer allowed. But we have no plans to require redress to be taken out of shareholders&#39 funds.”

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