KPMG target for Independent creditors

Should it be found to have been negligent, the Big Five firm is considered to be the most cost-effective target for action by a group of 2,000 creditors.

KPMG was auditor from 1986 until the insurer was brought down last month.

At a meeting yesterday, City law firm Class Law launched the Creditors of Independent Insurance Group saying it would be able to raise the £1m necessary to allow a class action.

Stephen Alexander, a partner at Class Law, said one of the best chances of recovering funds would be if KPMG were found to have acted negligently. Alexander, who said he would begin the process with an open mind, also identified the Department of Trade and Industry and the Financial Services Authority.

Independent appointed liquidators last week following its decision to suspend the writing of new business the previous week.

Initial concerns over the state of the insurer arose in May when external actuaries from Watson Wyatt found large claims had not been entered into the insurer’s accounting system. Watson Wyatt had previously provided Independent’s actuarial certificate and KPMG had signed off its 2000 accounts.

In December last year Independent was valued at nearly £1bn.

Meanwhile, the FSA has said it was Independent’s own decision to stop writing new business and declare bankruptcy. The comments followed reports that a former director had said the FSA forced Independent to make the decisions.

Links

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Independent FD unaware of contracts

Liquidators appointed at Independent

SFO called to probe ndependent