L&G 'vindicated' by FSA ruling

LEGAL & General has succeeded in its long-running battle to slash the £1.1m fine it has to pay the Financial Services Authority over the misselling of endowment mortgages by almost half.

News of the reduced £575,000 fine came in an earlier than expected version of a decision document from the Financial Services and Markets Tribunal which had been due later today.

The tribunal's decision vindicates L&G chief executive David Prosser and his team, who have always argued they have been used as a high-profile scapegoat.

Judge David Mackie's 'further decision' document highlights that a PricewaterhouseCoopers accountant used by the FSA actually told L&G that the 'FSA was on a mission against endowments where other firms had now set a precedent'.

Mackie is critical of the FSA and its investigation procedures, referring at times to the case as a 'prodigiously expensive affair' and 'an unnecessary waste of resource'.

But he stresses that although the 'FSA's mis-selling case largely failed', L&G's breaches of the selling rules 'were significant and persistent' albeit less serious that first alleged.

The life assurer failed in its linked bid to get the City watchdog to pay its £1m costs. The tribunal also decided not to take its concerns over the FSA's enforcement procedure any further, given the shake-up currently under way at the regulator.

News of the reduced fine somewhat overshadowed the crowning ceremony of L&G's fund management boss Tim Breedon as Prosser's successor.

Prosser, 61, will retire next March, when Breedon, 47, now deputy chief executive, takes over.