Legal and General in The Dock
It seems that Legal and General (L&G) may find that their appeal against the £1.1M fine imposed on it by the Financial Services Authority (FSA), for mis-selling endowment mortgages, has brought some of their "dirty laundry" into the public arena.
Yesterday the appeal heard from two homeowners that L&G did not explain the risks of endowment mortgages.
The FSA have now brought in five of L&G's customers to take the stand at the hearing. This hearing is scheduled to last six weeks, so it is not unreasonable to expect to hear from a few more unhappy endowment policy holders.
The essence of the questioning of the hapless borrowers was, how clearly L&G's salesmen warned them that endowment policies could not be guaranteed to pay off mortgages.
The crux of their response was that they were not warned, and had they known of the risk they would not have taken the policy on.
This is precisely what I have been saying for these past two years; why on earth would you take on a something that is not going to pay off the mortgage?
The endowment policies were designed to pay off the mortgages of those who took them out, they have failed to work; therefore the holders are entitled to recompense.