Insurer Royal & Sun Alliance has been fined �950,000 for endowment mortgage mis-selling.

The Financial Services Authority said the fine also related to deficiencies in Royal & Sun's sales systems and control functions between January 1997 and July 1999.

Royal & Sun's fine is the third largest fine for endowment mis-selling - and the fifth imposed by the City's watchdog to date.

Royal & Sun director Peter Hanby, said: "The fine and the actions announced today relate to past shortcomings, which we very much regret. Anyone with a legitimate complaint will receive the appropriate redress."

Sales failings

Endowments were sold in abundance during the 1980s alongside mortgages - often as a good way to clear a mortgage debt.

The serious nature of R&SA's failings, and the size and nature of the firm meant a significant number of its customers have been exposed to actual or potential loss Carol Sergeant, FSA managing director

But salesman often sold the policies without adequately explaining the risks to customers.

The FSA said Royal & Sun had failed to monitor and check the suitability of the sale of its mortgage endowments.

People who have mortgage endowment policyholders which were sold between 29 April 1988 and January 2000, when Royal & Sun stopped offering the policies to new customers, will receive redress where appropriate, the regulator said.

Carol Sergeant, managing director for regulatory processes and risk at the FSA, said: "We place great emphasis on the importance of adequate sales systems. It is the firms responsibility to ensure these systems are in place.

"The serious nature of R&SA's failings, and the size and nature of the firm meant a significant number of its customers have been exposed to actual or potential loss."

Cash reserves

In a statement, Royal & Sun said it was in the process of contacting these 35,000 policyholders to inform them of their right to complain.

It has set aside �11m to cover payments.

It said it had already reviewed a further 2,000 short- term contract policies and offered redress totalling �5.6m to appropriate policyholders.

Many endowment holders are also facing the headache of huge shortfalls on their policies, because of heavy stock market falls over the past two years.