Equitable Life chairman Vanni Treeves and chief executive Charles Thomson face calls for their resignation by policyholders in reaction to the latest disaster in the company's attempts to strengthen its financial footing.
Liz Kwantes, co-ordinator of the Equitable Life Members Support Group - which is linked to the Equitable Life Members Action Group - says reactions so far suggest policyholders are “none too happy” with the estimated £30m of legal fees spent in the case against former auditor Ernst & Young.
”This has really just gone down to the lawyers’ gravy train,” she says.
”Presumably, the lawyers spent the whole summer absorbing policyholders’ money.”
The worst part, she says, is policyholders will yet again feel let down by management, which told them to trust the directors in their decision to pursue the company’s former auditor Ernst & Young on the grounds there was a good chance of winning the case.
Policyholder action group members are likely to "expect Treeves and Thomson to resign," Kwantes says.
The groups will now focus on what might be done through the Parliamentary Ombudsman and Europe, she adds.
In the mean time, policyholders are once again left out of pocket, and now face the prospect of losing more money in legal fees on the continuing case against 15 former Equitable directors still before the courts.
There is also an annuitants case to consider, Kwantes says.
Last week, for example, action group members met the Petitions Committee of the European Parliament in Brussels.
An Ernst & Young spokesman has suggested Equitable’s case has cost policyholders £30m in legal and other costs. E&Y’s estimated costs are about £20m – although this does not take into account the in-house time and effort the case would have drawn from the organisation.
Further estimates are that the former directors still engaged in a legal battle with Equitable may have spent some £10m fighting their case thus far.
More problematically for Equitable, since these former directors are not in a position to contemplate a similar deal to the one struck today and it is therefore more likely they are not able to cover the legal costs encurred thus far, so they have nothing to lose by playing out the court case to the bitter end, tan E&Y spokesman suggests.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
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