Ernst & Young audit row hits Equitable
Policyholders of collapsed life assurance group Equitable Life want to see the role of its auditor, Ernst & Young, put under the microscope.
A policy holders action group wants to ensure that lessons are learned from the disaster which shocked the entire financial services sector when it became public at the weekend.
Stuart Bayliss, a director of Annuities Direct, co-ordinator of the The Equitable Life Guaranteed Annuities Policy Holders Action Group, said: ‘There’s no doubt the auditors did not question the Equitable Life’s own interpretation of their assets and liabilities. It’s the job of the auditors not just to accept what the company is saying but also to question how it arrived at its numbers.’
Ernst & Young earned almost £500,000 in audit fees from Equitable Life in 1999 and £1.1m for other work.
But E&Y defended its role saying it had adhered to best accounting practice and would defend itself robustly against any claim made against it.
Head of E&Y’s insurance practice Ron Holman, yesterday told The Times: ‘We were quite happy with their audit of the last accounts signed off on 31 December 1999.’So far the Financial Services Authority has ruled out a full inquiry into events at the insurer. Equitable Life’s former finance director Chris Headdon was on Friday made chief executive.
Equitable Life ceased to write new business and is now operating as a closed fund after a House of Lords judgement in July ruled its decision to cut terminal pensions bonuses to holders of guaranteed annuity rate policies was illegal.
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