Equitable Life FD defends accounting policy
Equitable Life's finance chief has defended the life assurer's accounting policy after it used £500m of future profit to help it remain solvent.
Charles Bellringer, the chief finance and investment officer, vehemently denied the society had used ‘creative accounting’ in documents submitted to the Financial Services Authority – these showed that £500m was counted in future profits as capital for the year to December 2001.
Speaking at the shareholders’ annual meeting in London, he said: ‘To accuse us of doing anything wrong is perverse. One of the greatest threats to society is solvency abuse.’
Accounting problems have been at the heart of Equitable’s problems and City analysts have criticised the use of accounting measures to flatter the ailing society’s financial position.
The 240-year-old assurer was forced to stop selling new policies in December 2000 after the High Court ruled it wrongly cut bonuses to customers who had bought guaranteed annuities, leaving it with a bill of £1.3bn.
Since the collapse, Equitable has sought redress with its new board of directors setting aside £540m to pursue potential legal claims.
The society is suing former finance director Chris Headdon and 14 other directors and is also suing former auditor Ernst & Young for its involvment.
Now on the board of the troubled society are David Adams, the former Chartered Institute of Public Finance and Accountancy boss, and Peter Smith the former UK senior partner of PricewaterhouseCoopers.