EMAG

The independent action group for current and ex Equitable Life policyholders, funded by contributions.

Equitable Members Action Group

Equitable Members Action Group Limited, a company limited by guarantee, number 5471535 registered in the UK

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Media Stories: 02/03/2007 - E&Y faces grilling over Equitable Life

E&Y faces grilling over Equitable Life

Long awaited JDS tribunal takes place this month

By Philip Smith

http://www.accountancymagazine.com/main.asp?storyid=9048

Ernst & Young will appear before a Joint Disciplinary Tribunal this month to answer questions over its audit work at troubled life assurer Equitable Life.

The long awaited tribunal, which will be held in London, will hear complaints laid against the Big Four firm by the Joint Disciplinary Scheme's executive counsel Chris Dickson. It will also hear complaints laid against E&Y partner Kevin McNamara and former partner Richard Combes.

E&Y is accused of signing an unqualified audit opinion on Equitable's accounts for the years 1990, 1991, 1992 and 1993, when the accounts were not prepared in accordance with Companies Act legislation, and for giving an unqualified audit opinion for the years 1994 to 2000, when the accounts did not show a true and fair view.

The JDS also alleges that the firm and partners failed to understand aspects of Equitable's business, such as bonuses, and the reasonable expectations of policyholders, and did not act with 'the objectivity and independence that is expected from a firm of chartered accountants and from chartered accountants'.

Complaints were made against the firm and its partners in 2004, but the tribunal was delayed as a result of court action taken by the new directors of Equitable against their former auditor. This case was settled in September 2005 when the two parties reached a 'drop hands' agreement whereby they discontinued their claims and agreed to pay their own costs.

The problems at Equitable stemmed from a House of Lords ruling in 2000 that the company would have to honour promises of guaranteed annuity rates for its policy holders, creating a 1.5bn hole in its accounts. E&Y resigned as auditor of Equitable in March 2001.
The JDS had planned to bring complaints against a former Equitable director and manager, both chartered accountants, but the move was later dropped.