Legal & General (L&G) is claiming a moral victory after the Financial Services Authority (FSA) was ordered to halve the £1.1m fine imposed on the company for the alleged mis-selling of mortgage endowments.
The Financial Services and Markets Tribunal ruled on 26 May that the fine imposed on L&G should be cut to £575,000. As first reported on www.thelawyer.com (27 May), although the tribunal criticised the FSA’s enforcement procedures, it did not order the City regulator to pay L&G’s costs, forcing the company to foot the £2m legal bill.
Freshfields Bruckhaus Deringer partner David Scott, who led the team advising L&G, said: “It’s not about money. It was a case about mis-selling mortgage endowments, and [L&G] have been vindicated of widespread mis-selling.”
Scott also argued that, although L&G ended up spending almost £2.5m on the high-profile battle, it was necessary for the life assurer to appeal to the tribunal. “The FSA was seeking to damage the L&G brand. What value can you put on that,” added Scott.
In January the tribunal cleared L&G of mis-selling endowments, providing that only eight out of 152 were mis-sold. In that judgment, the tribunal criticised some of the FSA’s past disciplinary processes and the lack of independence of the regulatory decisions committee.
Since the January judgment, the FSA has launched a review of its enforcement procedures.