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L&G contests FSA endowments fine

Legal & General is taking on the FSA to contest a £1.1m fine for endowment misselling.

L&G is challenging a ruling by the FSA that it missold higher-risk products to riskaverse savers from 1997-1999.

At a preliminary hearing of the Financial Services and Markets Tribunal last week, L&G&#39s solicitor said the company does not believe the FSA had enough evidence to justify its fine.

The FSA reviewed a random sample of customers and claimed that the results showed that 60 out of 152 had experienced misselling.

This is the first major challenge to a disciplinary ruling by the FSA. L&G is one of several firms which have been fined over endowments but is the first to dispute the decision in such a public manner.

Giving evidence before the Treasury select committee in January, L&G group chief executive David Prosser denied there had been any systemic misselling of mortgage endowments by L&G.

The tribunal has set a date for a hearing to be held in September.

Consumers&#39 Association senior policy adviser Mick McAteer says: “I think the industry will shoot itself in the foot by doing this. Consumer confidence in the insurance sector is low following a litany of misselling scandals and if this action is successful, I can see other providers following.”

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