E&Y steps up Equitable assault

Ernst & Young has stepped up its assault on Equitable Life, saying that
the only reason significant aspects of the case against it are being pursued is
to avoid the embarrassment of dropping them.

E&Y said earlier this week that Equitable Life’s case against it had
become ‘directionless and increasingly confused’ after the mutual dropped its
£100m surrender penalties claim.

E&Y is now gunning for the lost sale part of the claim, which amounts for
£1.3bn of Equitable’s £2bn claim against its former auditors, and is pushing for
it to be dropped.

Mark Hapgood QC, for E&Y, asked again this morning whether Equitable was
still pursuing the lost sale claim.

‘It was not in put any shape or form to the present witness,’ he said. ‘It
represents about 70 per cent of the whole claim. The headline figure is over
£1bn. The headline figure on the bonus cut claim is £521m, and with the
concession about the cut-off date, that now falls to well below £500m.

‘It is only the lost sale claim that enables the Society to go on saying to
the press, week after week, that they are claiming – and inferentially may
recover – £2bn from Ernst & Young. It is quite probably the thought of the
embarrassment of having to climb down from that figure that is keeping the case
alive.’

When quizzed by the judge on whether it would be continuing with the claim,
Iain Milligan QC, for Equitable, said that he had indicated Equitable’s
intention to continue with the claim to E&Y.

E&Y was emboldened recently by a remarkable own goal scored by Equitable,
which raised the prospect of a new £100m claim against E&Y, only to drop it
several days later.

The claim had revolved around the idea that Equitable might have increased
surrender penalties in the late 1990s if it had been properly advised of its
financial position.