Yesterday's Financial Services and Markets Tribunal ruling in the battle between the FSA and Legal & General over alleged endowments mis-selling takes top billing in today's papers.
The Daily Telegraph takes the line the ruling was a victory for L&G as the Tribunal ruled there was no evidence of widespread mis-selling.
It does acknowledge, however, that the eight cases of mis-selling identified out of a group of 60 cases the FSA originally stated it felt were mis-sold, but which the Tribunal said not, still left room for improvement.
Interestingly, while the fine set by the FSA of £1.1m, which is now subject to another day’s hearings in front of the Tribunal, and which is expected to be set much lower if at all, pales against the legal costs teased out from the protagonists by the Telegraph.
L&G states its legal costs were “a couple of million pounds”, while the FSA says the question of how much it spent on lawyers “is not pertinent”.
The FT says the ruling “undermined” the credibility of the FSA.
The paper adds this latest blow comes hot on the heels of what many see as the regulator’s failure to secure the penalties it originally sought from operators of split capital investment trusts - a deal was announced on Christmas Eve.
The FSA also faces claims from L&G to pay its legal costs, the paper writes, although the FSA has come out fighting by pointing to the company’s deficient procedures that led to mis-selling in the first place.
Most criticised, however, was the regulatory decisions committee (RDC), which pushed for the massive fine and regulatory action in the first place, the FT writes.
”The tribunal found that the RDC relied too heavily on a report by PwC, the professional services firm, which was never intended to be used in a legal context.”
The fighting spirit of the regulator is the main angle in The Times, which says the FSA is planning tougher and more intrusive investigations after the criticism of its current procedures.
”The squabble over who won was overshadowed by the FSA’s threat to be tougher and more demanding of firms it is investigating. Rob McIvor, director of communications at the FSA, said: ‘We’re clearly going to have to take a harder line against firms that don’t co-operate with us,’” The Times writes.
”Another senior FSA figure concurred: ‘In future we’ll have to investigate in a more intrusive way and that will add to the expense.’”
Meanwhile, the paper also notes that the man who headed the investigation into L&G, FSA director of enforcement Andrew Proctor, announced 12 days ago he is to leave for a private sector job with Deutsche Bank as head of compliance UK and Western Europe.
”The FSA insisted yesterday that his departure had nothing to do with the L&G case. Mr Procter, 42, has run the FSA’s 200-strong enforcement arm for four years. In that time his department has fined a total of 57 firms £43.1 million. He will join Deutsche in April after two months in purdah,” The Times writes.
The Scotsman, like the FT, feels the FSA credibility is on the line.
”The case was widely seen as a landmark in the five-year history of the FSA, which has come under increasing pressure for its iron-fisted approach to City activities. L&G was the first firm to appeal against disciplinary action from the FSA in a move that is seen as putting the regulator’s credibility on the line. “
This paper too, however, notes that L&G does not come away scot free from the Tribunal’s ruling.
”The insurer was not spared criticism for its role during the mis-selling scandal, with the tribunal noting that it had failed to ensure that its customers understood the risks associated with endowment mortgage products.”IFAonline
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