Legal & General, one of Britain's largest insurance companies, yesterday lost its appeal against a guilty verdict on mis-selling policies designed to repay mortgage loans. The Financial Services and Markets Tribunal found it had failed to ensure customers understood the risk that the policies might not pay off the loans, or that they were prepared to shoulder that risk. However, the tribunal's findings are no less damaging for the Financial Services Authority, the regulator that fined L&G £1.1m, whose procedures were subject to devastating criticism.

L&G can take comfort from the likelihood that the fine will be reduced, since the tribunal rejected the FSA's estimates of the scale of mis-selling, extrapolated from a small sample. However, the tribunal added that common sense indicated there had been "a fair number" of mis-sales beyond the eight it confirmed from close examination of 13 cases where it was alleged to have occurred. This should be no cause for celebration at a company that sold 41,000 of the policies to customers with a "low" attitude to taking risk.