More customers accuse L&G

TWO homeowners told a court today that salesmen from insurer Legal & General failed to explain the risks of endowment mortgages.

They bring to five the number of L&G customers summoned by the City watchdog, the Financial Services Authority (FSA), in its attempt to force L&G to pay a £1.1 million fine for endowment mis-selling.

The FSA claims L&G systematically mis-sold endowment mortgage to risk-averse borrowers in the late 1990s. But L&G disputes the allegation, and the row has now become the subject of an unprecedented, six-week tribunal being heard at London County Court.

Today was day four. And, for the second day running, ordinary borrowers were called to describe how L&G sold them their policies.

They faced a barrage of questions about how clearly L&G's salesmen warned them that endowment policies could not be guaranteed to pay off mortgages.

Ian Bloom, 32, a process operator from Cleveland, County Durham, told the court that he had not been prepared to take any risk as far as mortgage repayment was concerned when he first sought L&G's advice in 1996. If he had been told that the endowment represented a risk, he said, he would never have taken it out.

Under oath, he said he was not told by his adviser, Anne Toby, of the risk of a shortfall.

When questioned by L&G's barrister Charles Flint QC, Mr Bloom told the court that he and his wife chose this type of endowment policy rather than another type of mortgage 'because of the fact we could pay it off earlier'. The Blooms have since surrendered the policy.

A second witness, Sadie Curtis, 30, of Halesworth, Suffolk, stated that she and her now husband were planning to get married when they took out £40,000 endowment policy in 1997.

This was the maximum amount they could borrow and chose the policy on the basis of advice from L&G adviser and family friend Roger Smith who, Mrs Curtis told the court, 'never actually said that there might be a shortfall'.