E&Y faces bill from Equitable
The battle lines have been drawn for Ernst & Young's defence of its involvement in the fall from grace of Equitable Life.
Link: E&Y expects latest Equitable claim to fail
However, the size of the potential damages facing the Big Four firm could range from as little as £12m to £500m after the judge, Mr Justice Langley gave his approval for Equitable to pursue its case relating to bonus declarations last Friday.
The next stage will begin at the appeals court on 19 May, where QCs acting on behalf of the two firms will be at loggerheads. E&Y will appeal the decision to allow Equitable to pursue the bonus declaration claim. The firm remains defiant: ‘We continue to be confident that the bonus claim is ill-conceived and bound to fail at trial,’ said partner Victoria Cochrane.
Meanwhile, Equitable Life will appeal against both of the judges’ decisions to strike out the lost sale claim and to reduce the value of the bonus declaration claim.
The bonus declaration claim accuses E&Y of negligence, alleging that if the firm had advised Equitable of disclosures in relation to its guaranteed annuity liabilities, it would not have issued such generous bonuses to policyholders. Most commentators feel Ernst & Young will offer to settle, with a possible figure in the region of £200m being touted as realistic.
An Equitable spokesman said he was ‘pleased’ with the judges’ decision.