Selling A Legal and General Endowment Policy (F.S.A. Guide )

Legal & General challenges FSA ruling

Press Association
Friday November 21, 2003

Life insurer Legal & General  today set the scene for a court battle with the City watchdog by rejecting a ruling against it involving the sale of endowment policies.

Legal and General said it disagreed with a decision by the Financial Services Authority (FSA) relating to the sale of a small proportion of its mortgage-related assurance policies issued between 1997 and 1999.

The insurer said it was referring the issue, which could result in a fine being imposed on the company, to the Financial Services & Markets Tribunal. It also said it disagreed with the process by which the decision was reached.

Legal and General said it was informed of the FSA's action in a so-called "decision notice" issued by the authority.

The FSA can issue such notices following an investigative process involving its regulatory decisions committee (RDC), which considers a recommendation by the authority and makes a ruling.

Legal and General is understood to feel that the procedure is unfair because the RDC lacks independence.

In a statement, Legal and General said it had "taken the first opportunity allowed by the FSA's process to have the matter heard independently".

The FSA and Legal and General both refused to comment on the detail of the case.

Legal and General, which expects to have the case heard by the middle of next year, said it believed its reserves were sufficient to meet any proper claims.

It added: "Legal and General is committed to the fair treatment of its customers."