Legal & General appeal against FSA ruling

The Financial Services and Markets Tribunal said in January 2005 that Legal & General did mis-sell endowment mortgages in the late 1990's but most of the FSA's examples of mis-selling did not stand up.

• "The FSA has proved eight mis-sales to the required standard from the 13 cases about which we heard evidence. It would not be just for us to findany mis-sales in the other 47 cases .... We do not accept the FSA's case that the conclusions of the sales review and our findings on individual cases can be taken to reflect the pattern of mis-sales generally."
   
• Poor procedures at Legal & General were likely to have created more mis-selling cases but except to this limited extent the mis-selling case fails.
   
• Legal & General written sales procedures did not ensure that advisers explained the risk of a capital shortfall so that customers understood it.
   
• "Legal & General's procedures failed to ensure that advisers had done enough to satisfy the requirement that customers understood and were prepared to take the risk that their low cost with profit endowment policies might not produce sufficient investment returns to pay off their mortgages."

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Legal & General have told the Treasury Select Committee that they will not time bar endowment complaints.

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Legal & General and Lautro charges

On LAUTRO charges a Legal & General spokesman says

Between 1 July 1988 and 31 October 1993, Legal & Generl's charges exceeded industry standard charging assumptions. As a result, a higher premium would have been required in order to repay the mortgage at the growth rate set out in the illustration.

Legal & General agreed to top up its policies.