Ernst & Young fined over Equitable Life audits
Accountancy firm, Ernst & Young (E&Y), has been fined in connection with its role as auditor of Equitable Life, which came close to collapse a decade ago.
From the 1950s Equitable sold policies that guaranteed a minimum annuity rate to investors, but the strategy left the UK’s oldest mutual unable to honour its promises.
Two years’ ago, the Accountants’ Joint Disciplinary Scheme found that E&Y had demonstrated a lack of professional competence and a lack of objectivity and independence when carrying out audits in the 1990s, at which point Equitable’s reverses were insufficient to meet its obligations.
The case was taken to appeal and the fine reduced from £4.2 million to £500,000.
Meanwhile, Equitable Life policyholders fight on.
In 2008, Parliamentary Ombudsman, Ann Abraham, recommended the establishment of a scheme that would consider individual claims for compensation.
However, the Government rejected Ms Abraham’s findings and proposed that only policyholders who had been “disproportionately affected” should receive compensation.
The Equitable Members’ Action Group (EMAG), which represents around 21,000 policyholders, has since been successful in securing a High Court ruling against the limitations imposed by ministers, although the latest proposed offer of compensation, as set out in March in a new report by Sir John Chadwick, has been rejected by EMAG.
Category: Companies News, Insurance News
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