Equitable wins right to sue directors Equitable Life has won the right to sue nine former non-executive directors for £3.3bn. Equitable claims the directors failed to protect the company's policyholders from huge losses.
The directors deny that they are to blame for the financial crisis which hit Equitable Life in the late 1990s.
Mr Justice Langley, a High Court judge, was urged by the counsel for the non-executive directors to strike out the claim as "hopeless" and a waste of time and money before it got to trial.
However, the judge has decided that the non-executive directors have a case to answer.
The non-executive directors will join six former directors of the Equitable in court.
The case is expected to set a precedent for future cases being brought against non-executive directors, and could discourage people from taking on such posts at all.
Blame
Commenting on the decision, Vanni Treves, Chairman of Equitable Life said: "We are pleased, but not surprised, that Mr Justice Langley agrees that this case should proceed to trial.
"The Board believes there is a strong claim against the former directors and in the interests of policyholders it has a duty to proceed."
FORMER NON-EXECUTIVE DIRECTORS IN COURT Peter Davis - first director general of National Lottery David Price - of investment bank Warburgs John Sclater - board member of Foreign & Colonial Investment Trust Peter Sedgwick - ex-Schroders Bank chief Jonathan Taylor - former chief of food wholesaler Booker Alan Tritton - commercial banker Peter Martin - former solicitor Jennie Page - former Millennium Dome boss David Wilson - chairman of housebuilder Wilson Bowden
Groups representing hard-pressed policyholders, who have seen the size of their savings slashed by the insurer expressed relief at the decision.
"It is good that the directors will have to answer for what we see as maladministration. The current Equitable board has promised they will only pursue the case if it makes economic sense," Liz Kwantas of Equitable Life Members Help Group told BBC News Online.
In September, Lawrence Rabinowitz QC, defending six of the nine, told the court: "The only effect would be the ruin or near ruin of these individuals in trying to defend themselves, without any benefit to society."
He added the action against the nine had resulted from "the usual thrashing about to find as many people to blame as possible".
The former directors sat on the Equitable Life board between 1996 and 2001 and are accused of negligence and failing in their fiduciary duty.
Equitable's problems came to light in 1999 when it admitted that it could no longer afford to pay policyholders with guaranteed pensions the amount they had originally promised when interest rates were higher.
These policyholders took the company to court when it tried to back out of its previous commitments.
Equitable Life lost the court battle and was left with huge legal bills, as well as being forced to pay the policyholders what it had said it could no longer afford to.
The mutual survived as a result of a compromise deal reached with the policyholders but has been steadily losing customers ever since.
Auditor sued
The crisis forced the society to close to new business and drastically cut members' savings.
In July the Equitable was given leave to bring a case for damages against former auditors Ernst & Young for £2.6bn.
The insurer claimed that E &Y failed to warn it of the financial liabilities it faced from the guaranteed annuity products.
If it had known what level of provisions it needed to have made, Equitable said it would not have declared the bonuses it did during the late 1990s.