AN ENGAGED couple buying their first home were “led down the garden path” by a Legal & General sales agent and mis-sold a £33,000 mortgage endowment policy, a City tribunal heard yesterday.
Wayne Waite, a quality systems co-ordinator, and his then fiancé, Paula Hughes, decided to seek the advice of the L&G agent after rejecting a rival salesman from Royal London as “too pushy”.
However, the L&G agent, Wayne Butler, never explained that there was a risk that the policy proceeds might not be enough to pay off their debt, Mr Waite told the court.
The evidence came in a case in which L&G is challenging a £1.1 million fine from the Financial Services Authority for mis-selling endowments between 1997 and 1999. The case is the first in which a major financial institution has challenged the FSA and questioned its methods in court.
Mr Waite, 33, of Treorchy, South Wales, was one of three dissatisfied L&G customers to testify against the life assurer.
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Taking out the endowment policy was a mistake, said Mr Waite, 33, who is now married with a daughter. “I suppose when you set up a house it’s a potential minefield because you have a lot to think about and you can be led down the garden path,” he said. “I think that’s what happened to me.”
Under cross-examination by Charles Flint, QC, for L&G, Mr Waite said he thought the endowment, which was taken out in 1998, was “guaranteed” to pay off the mortgage. “I just thought the money would go in a savings plan that would be enough to pay off the mortgage,” he said.
Another witness, John Colley, an engineer in Bristol, said he and his wife relied on L&G advice to buy their £85,000 “dream house” in 1997. Mr Colley, then earning £19,752, was advised to take out a £12,000 endowment policy. “I believed that the policy was certain to pay off the mortgage,” he said. “I was not aware there was a risk of a shortfall. I was naive perhaps.”
Mr Colley said he did not recall the L&G agent, Louise Bloxham, explaining the risk and that if she had done so, it was “obviously played down so as to make it seem non- existent”.
He said: “I feel we were mistreated by L&G, as their adviser misrepresented to us how much we were going to get at the end.”
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Cross-examined, Mr Colley admitted not reading all of an L&G document on risks. He said: “I’m afraid I’m guilty of signing documents I haven’t necessarily read.”
A third witness, Simon Griffiths, of Solihull, said an L&G salesman had played down the risk of a shortfall.
The case continues.