Equitable Life begins multi-billion lawsuit against Ernst & Young

EQUITABLE Life Assurance Society today begins a £3.8 billion lawsuit claiming its former management and auditor Ernst & Young led the London-based insurer to the brink of collapse.

Equitable says the accounting firm and 15 former directors failed to prepare it for a 2000 court judgement that cost the company £1.5bn, blocking its sale and forcing it to cut payments to around 750,000 policyholders. Ernst & Young and the insurer’s directors deny wrongdoing and contest the claims.

The lawsuit, the biggest of its kind in British history, has been a factor in a British government proposal to allow shareholders to limit auditors’ financial liability and may set new corporate governance standards for company directors, lawyers said.