Legal & General (L&G) will move to have a £1.1m fine imposed by the Financial Services Authority (FSA) for the alleged mis-selling of endowments struck off, following the judgement by the Financial Services & Markets Tribunal .

L&G argued against the FSA’s claim that, because it did not have proper sales and compliance procedures in place, it sold with-profits endowment mortgage policies between 1997 and 1999 to customers not prepared to accept the risks involved.

The Tribunal’s decision cleared L&G of the charge of widespread mis-selling but said that procedural rule breaches would have caused or contributed to mis-sales. However, it said the FSA was not justified in this case to extrapolate from a small sample to reflect a pattern of mis-selling, but common sense indicated there would have been a fair number of mis-sales beyond the eight that had been established. It also recommended a reduction in the penalty imposed by the FSA after reviewing its enforcement procedures.

David Prosser, chief executive of L&G, felt vindicated by the decision, and said: “L&G’s board decided to appeal against the decision because we disagreed with it and the way it was reached. We are pleased the case has now been heard by an independent body and that the Tribunal has agreed with us that the conclusions reached were not justified by the material before it.”

The FSA accepted the analysis and intends to use its powers in comparable circumstances to avoid future difficulties.

Rob Clifford, managing director of Mortgageforce, said: “L&G was right to go through the process and protect its position, and has demonstrated that the FSA was overzealous in its decision-making process.”