L&G revolt over guilty verdict

THE Financial Services Authority is facing the biggest challenge yet to its authority after Legal & General said today it was refusing to accept a guilty ruling on alleged endowment mis-selling.

The life assurer plans to refer the matter and a threatened fine to the independent Financial Services and Markets Tribunal.

The revolt paves the way for one of the most public battles in City history, with FSA officials and senior L&G managers cross examined under oath in open court. The hearing is likely to take place next spring.

The decision follows a guilty ruling by the FSA over the alleged mis-selling of a small number of mortgage-related insurance policies between 1997 and 1999.

L&G said: 'Legal & General, after careful consideration and on legal advice, disagrees with both the decision reached by the FSA and the process by which it was reached.'

The company has one of the cleaner reputations in the financial services industry. It was last fined almost 10 years ago for compliance failings.

Many City firms feel FSA procedures are unfair because the regulator in effect acts as prosecutor, judge, jury and hangman.