Troubled mutual assurer Equitable Life has appointed Herbert Smith to consider whether it has a case against its professional advisers and the Financial Services Authority over its acrimonious dispute with its own policy holders.
The action of legal advisers Denton Wilde Sapte and former auditors Ernst & Young are set to come under close scrutiny, though Equitable has stressed that it has as yet seen no evidence of negligence.
The move comes after Legal Week this month revealed that a shortlist of law firms was being put forward by policy holder action groups, including Slaughter and May, CMS Cameron McKenna and Linklaters & Alliance (Legal Week 5 April).
The life insurer agreed with action holder policy groups that consideration should be given to the potential for redress against those who played a major role in the events that landed the assurer with a £1.4bn liability in relation to inflation-protected annuities policies.
The instruction of Herbert Smith, which was announced by Equitable on Saturday (14 April), has raised expectations that Equitable intends to take a hard stance against any negligent party.
Herbert Smith was not one of the original shortlist of law firms put forward by the main action groups, and it is understood that a couple the law firms initially approached by Equitable were conflicted out. Equitable first contacted Herbert Smith last week.
Equitable has to date denied that it has seen any evidence of negligence. However, it will provide Herbert Smith with its own records and documentation from public records collated by action groups so that a thorough audit can be carried out. Chairman Vanni Treves has assured policyholders in the past that if evidence is found then Equitable will seek compensation without fear or favour.
Herbert Smith is unable to confirm at this stage who will lead the team.