Equitable Life today begins its court battle to appeal a ruling given in February that its former auditors Ernst & Young were not responsible for the company's financial demise.
The troubled insurance company is contesting the decision by a High Court judge to throw out the majority of a £2.6bn suit against the accountants.
Equitable had claimed that it would have put the society up for sale with a £3.5bn price tag had Ernst & Young fully informed it of the precarious state of its finances. Paying guaranteed pension rates to its customers left Equitable with a £1.5bn bill in July 2001 and the company was forced to close to new business after being unable to find a buyer.
Equitable is also contesting the ruling on its claim that Ernst & Young failed to rein in its over-generous bonus policy. The judge said the £1.6bn claimed was “fanciful”, but did grant Equitable the right to continue. It has now submitted a new £500m claim on this issue.
“Based on legal advice we believe we have a very strong case against Ernst & Young and we are confident the appeal court will find in our favour,” an Equitable spokesman said yesterday.
Ernst & Young, however, says it carried out all the duties required of it as auditor to the firm and will continue to fight Equitable's claims. The appeal hearing is likely to last a week.
Equitable is also gearing up to sue the Government for redress, should the all-encompassing report into the company by Lord Penrose find that the regulators responsible for monitoring Equitable were at fault. The report is due out later this year.