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FSA fires opening salvo in tribunal over L&G appeal

Legal & General&#39s appeal against a £1.1m FSA fine for misselling opened this week with the regulator launching a salvo against the firm.

The FSA accused L&G of a catalogue of failings in selling endowments and ignoring warnings.

The regulator claims that L&G kept insufficient documents on sales, turned a blind eye to warnings and refused to co-operate.

L&G is appealing at a Financial Services and Markets Act tribunal over a fine for misselling of mortgage endowments between 1997 and 1999.

Laywers for L&G and the FSA outlined their cases this week at the beginning of the hearing which is expected to last around six weeks at London County Court.

In its outline case, Hodge Malek, QC, for the FSA, said regulators&#39 visits in 1998 highlighted insufficient client records that did not show the decisions behind the sales process and inadequate reasons-why letters.

He claimed that L&G refused to co-operate with business consultants from Price- waterhouseCoopers who were called in to assess the sales process in 1999.

Malek said: “What PWC were saying would not have come as news to L&G in the context of what had been said in 1998. L&G took comfort in the fact that they were not brought to investigation earlier.”

L&G argues that the FSA&#39s enforcement process was wrong because it used a broad-brush approach when each case should have been dealt with on its own merits.

L&G QC Charles Flint said: “We believe that the FSA is trying to distract attention away from the real issues.”

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