Whistleblowers report L&G to FCA over compliance failures

Employees at Legal & General have reported the company to the Financial Conduct Authority over alleged compliance and risk failures at the insurer’s £1trn asset management arm, the Financial Times reported.

The failures, potentially costing clients millions of pounds, were flagged up to the FCA under whistleblower rules. At least three Legal & General Investment Management (LGIM) employees alleged there was a poor risk culture starting with senior managers at the FTSE 100 company’s active asset business, the FT said.

One whistleblower’s complaint said: “Investors in Legal & General and LGIM products, many of them UK retail investors, are having their savings and investments put at risk by the current toxic risk culture.” L&G, founded 182 years ago, is one of the biggest investors in the UK stock market.

An internal L&G team is alleged to have failed to report trading errors in a breach of company policies, including a mistake that caused big losses for a large retail investment trust, the FT said. The company investigated and in March, in a provisional finding, it said there was evidence procedures were not followed. A whistleblower said he was bullied after raising concerns, the FT said.

L&G told the FT it did not comment on whistleblowing but added: “We take these issues very seriously and in the months since these allegations were first made we have been conducting a full investigation using external advisers.” L&G has been in touch with the FCA, the FT was told.

In June L&G said LGIM was an important part of its business and that in normal markets the division's profit would rise by up to 10% a year. In May the company said LGIM chief executive Mark Zinkula would step down in August 2019.