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Court says Equitable can sue for £2.6bn

Equitable Life has been given the green light to sue former auditors Ernst & Young for up to £2.6bn after the Court of Appeal threw out an earlier ruling disallowing most of its claim.

The case is expected to start in October next year, with Equitable claiming that E&Y breached its duty by not telling the company that its accounts were deficient and that the auditors did not include provisions relating to guaranteed annuity options.

Equitable says if it had known its true position in 1998, it would have tried to sell the business and assets earlier and would not have continued to declare bonuses from 1997-2000.

In February, Mr Justice Langley rejected most of Equitable&#39s claim, allowing only up to £500m to be pursued.

E&Y says it is confident that Equitable&#39s case will be “discredited” and is committed to defending the claim. It says the Court of Appeal was sceptical and doubted the size of Equitable&#39s claim.

Equitable Life Members&#39 Support Group co-ordinator Liz Kwantas says: “It is the first good news that policyholders have had. There was a concern that Equitable was throwing good money after bad on lawyers but at least they now feel that probably something will happen. They may settle out of court.”

Equitable Life chairman Vanni Treves says: “We are pleased but not at all surprised that the Court of Appeal has vindicated the board&#39s decision to pursue this important litigation in the interests of policyholders.”

Ernst & Young partner and general counsel Victoria Cochrane says: “We view the strikeout proceedings, and Mr Justice Langley&#39s comments in particular, as having highlighted the serious weaknesses in the society&#39s case and we believe that it has clearly damaged its credibility.”


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