PracticeAccounting FirmsE&Y denies intention to settle with Equitable

E&Y denies intention to settle with Equitable

Big Four firm Ernst & Young has strongly denied rumours that it could seek an out of court settlement with Equitable Life before High Court civil litigation planned for next year.

Equitable is suing its former auditor for £2.6bn with the hearing scheduled to begin in April.

Following last week’s Joint Disciplinary Tribunal complaints, which called into question 11 consecutive years of audits at the life insurer, E&Y was tipped by sources close to the case to approach Equitable with a settlement proposal.

The source said the separate litigation brought against E&Y by Equitable Life, combined with the JDS complaints, could have an ‘impact’ on both existing and potential clients of E&Y, which will lead the Big Four firm to ‘pick up the phone quite soon’.

A spokesman for E&Y said the firm ‘denies strongly any intention to approach Equitable with a settlement and denies strongly any attrition with clients’.

E&Y partner, Kevin Paul McNamara, and former partner, Richard George Combes, are at the centre of the JDS criticisms.

The JDS complaints charge E&Y with failing to ‘understand ELAS’s business in relation to, inter alia, bonuses, the reasonable expectations of policyholders, and those ELAS with-profits pension policies which entitled the holder to choose a pension at a guaranteed annuity rate’.

The findings of the JDS also led it to allege E&Y failed to act with the ‘objectivity and independence’ expected from chartered accountants.

An independent tribunal is likely to hear the JDS case before Christmas. ‘We believe that the complaints are unfounded and misguided and we will be mounting a vigorous defence,’ Ernst & Young said in a statement, and added that the complaints are ‘entirely separate’ from the High Court litigation.

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