Equitable to sue E&Y
Equitable Life, the trouble life insurer, has said it will sue its former auditor Ernst & Young, in a claim that could cost the Big Five firm up to £2.6bn.
The lawsuit, which follows a report compiled by lawyers Herbert Smith last November, alleges negligence in the firm’s audit of the insurer after it ran into trouble after losing a legal battle over ‘guaranteed annuity rates’.
Herbert Smith wrote to E&Y asking it to explain its actions.
In a statement, the life insurer said: ‘The Society’s former auditors Ernst & Young have not provided a substantive reply. We have therefore started legal proceedings against them.’
But the firm has always maintained its audit was robust – it said: ‘For the record, we told Herbert Smith that they had not provided us with sufficient information for us to provide a ?substantive reply.’
It said it would be reviewing the details of the claim.