The court was told that none of the problems suffered by the troubled mutual life assurer were the responsibility of Ernst & Young, which was Equitable’s auditor.
Ernst & Young is asking Mr Justice Langley to rule that the board’s claim that it failed to give proper advice during its time as Equitable Life’s auditor in the 1990s has ‘no reasonable prospect of success’, and should be struck out without the need for a full trial.
Its counsel, Mark Hapgood QC said that what had gone wrong with Equitable ‘is something for which it is very difficult to see that any responsibility can lie with Ernst & Young’.
The Equitable Life board hope to pursue the claim to a full trial, in which it will seek damages for Ernst & Young’s handling of its affairs prior to the troubled period in which Equitable – the world’s oldest life assurer – came close to collapse in the wake of a damaging House of Lords defeat in a test case over its stance on guaranteed annuity policies.
Equitable had maintained up until its defeat that it faced an exposure of only £50m as a result of the guaranteed annuity problem and had provided for up to £200m in its balance sheet, but when it lost in the House of Lords it admitted its liabilities extended to more than £1.5bn.
In its claim against Ernst & Young, the new Equitable board claims that theauditor knew of this high-risk exposure and should not, in those circumstances, have signed off a number of accounts.
But denying that his client was to blame today, Mr Hapgood said: ‘None of that at all is the responsibility of Ernst & Young.’
This hearing is set to last for four days.
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