The six-week hearing before the Financial Services and Markets tribunal, started yesterday.
The FSA was accused of making a “wholly contrived” case against Legal & General, that could not justify allegations of endownment mis-selling.
The insurance company cliamed the chief financial regulator had assembled flawed evidence because it was anxious to be seen to be pursuing a campaign against endownment mis-selling.
L&G urged the Financial Services and Markets Tribunal to dismiss the FSA's mis-selling charges and strike out the regulator's proposed £1.1m fine.
On the first day of the tribunal hearing, the FSA claimed L&G breached regulatory rules, by selling endownment policies, known as “with profits flexible mortgage plans”, to risk-averse customers betwn 1997 and 1999.
The regulator alleges that L&G had defective sales and compliance procedures to mis-selling of such policies, which were designed to repay mortgages by investing in the stock market.