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L&g •fsa – the lawyers’ view

Beachcroft Wansbroughs partner James MacNish Porter says: “I think it is a points’ draw. The comment has been coming out largely in favour of Legal & General. But is L&G going to get away without a fine? No. In my dealings with L&G, they have never been afraid to stand up for what they believed in, or to question received wisdom. In this case, received wisdom was not to challenge the FSA. It is really a case of how things will work in the future.I think that, having learned from this, the FSA will be more confident applying regulation in future.”

Thomas Eggar partner David Bird says: “Legal & General came out best in the tribunal. Although the penalty still stands, the main allegation of widespread misselling was proved to be untrue. The original investigation needed to be more thorough. The survey it was based on was far too small. But L&G is still guilty to some degree so they have not been cleared of wrongdoing. The tribunal can only give recommendations so until we know more about how the FSA will react, other large insurance companies will have to tread carefully.”

Eversheds solicitor Claire Frater says: “Overall, I think the FSA have come out of this worst off. The FSA will say they have raised doubt over L&G’s services but what this case has done is heartened other providers to challenge the authority, risking an adverse tribunal result and the publicity that follows rather than just accepting the fine. There is a danger in pitching fines too high. The bigger the fine, the more likely it is that the provider will challenge the FSA on it.”

Financial Services Legal partner Gareth Fatchett says: “Legal & General has come out on top. The company has shown that the investigation process of the FSA needs looking at. The decision is embarrassing for the FSA and it means the regulator will have to be seen to be investigating fairly in the future. The FSA will be equally heavy in the extent to which it exercises its power in the future but will be more careful about how it does it.”

Robert Finney partner Denton Wilde Sapte says: “I would not want to comment on the Legal & General side of the case but the ruling certainly leaves open some questions for the FSA regarding its processes which were found to be at fault. There has been a review at the FSA but we are yet to see whether the findings will be fully implemented. I am not sure there has to be legislative changes but something needs to be done internally as the ruling showed that mistakes were made.”

Clarke Willmott partner Peter Nellist says: “I think that Legal & General came out top.I found the size of fine that was imposed in the first place amazing, considering the original evidence produced against L&G. You cannot look at the small sample number that the FSA took and extrapolate the way they did. I am not surprised that L&G appealed or that flaws were found in the original ruling. The FSA has to raise its game. It cannot just hand out such a large fine without a standard of proof from an independent tribunal.”

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