Equitable Life probe to include auditors

In December last year reported that Equitable Life policyholders wanted to see the role of its auditor, Ernst & Young, put under the microscope.

And although at present the scope of the inquiry is unknown, it is likely that any examination will include E&Y.

Responding to the possible inquiry, Rob Holman, head of E&Y insurance practice, told the Financial Times today: ‘It would be very difficult to draw up a set of accounts on the basis of a decision that hadn’t yet been received.’

At the time, E&Y defended its audit work saying it had adhered to best accounting practice and would defend itself robustly against any claim made against it. According to Holman, E&Y were ‘quite happy with their audit of the last accounts signed off on 31 December 1999’.

In 1999 the firm earned £500,000 in audit fees from Equitable Life and £1.1m for other work.

The move by the ICAEW comes as the Commons Treasury selects a committee, to be announced next week, tasked with investigating Equitable Life.

Meanwhile, Vincent Cable, the Liberal Democrat trade and industry spokesman, has threatened to hand over the case to the parliamentary ombudsman if the losses facing policy holders were not addressed. Equitable Life has liabilities totalling £1.5bn and more than a million policyholders have been affected by its collapse.

In December, the Treasury ruled out government compensation for policyholders, but announced that the Financial Services Authority would conduct an inquiry into the affair and publish a report on it findings. The FSA report has yet to be released.

Since 8 December 1999 Equitable Life, the worlds oldest mutual life assurer has ceased writing new business and operated only as a closed fund.

In July, the House of Lords ruled its decision to cut terminal pensions bonuses to holders of guaranteed annuity rate policies was illegal.


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