Equitable Life has just been handed a slim lifeline by the Court of Appeal, which today ruled it can...
Equitable Life has just been handed a slim lifeline by the Court of Appeal, which today ruled it can go ahead and sue former auditor Ernst & Young over its failure to identify the yawning gap between assets and liabilities that led to the life company's ongoing crisis.
Equitable's can now appeal against previous court ruling that it could not seek damages incurred when it was forced to close to new business as a result of being unable to cover guaranteed annuity rates.
The action was brought as part of current Equitable management's legal thrust to boost its coffers ever since it failed to sell itself as a going concern after losing a battle to cut guaranteed annuity rate payments in the House of Lords.
However, it is likely that Ernst & Young will vigorously protest against the sums that Equitable is set to ask for in damages.
A previous High Court ruling capped any potential damages at £500m, but the Court of Appeal's decision means Equitable is once again likely to press for the full £2.6bn it originally claimed.
Equitable says the bigger sum is the value of a missed opportunity to sell the company before the GAR problems were identified in 1998 and covers the payment of bonuses to members during the 1990s that it could not, in retrospect, afford.
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