UK - Watson Wyatt could face a series of claims over actuarial advice if it loses a negligence battle, pension lawyers warn.
Sources close to accounting giant PricewaterhouseCoopers – which is liquidator for the now defunct Independent Insurance – expect proceedings against Watson and KPMG to begin “within the next two months”.
Watson was Independent’s actuarial adviser while KPMG was the firm’s auditor.
Independent collapsed in 2001 after unquantifiable losses stemming from claims that were never recorded in its accounting systems were discovered.
PwC told creditors earlier this year that it was considering proceedings against Watson Wyatt and KPMG for failing in their duties.
A source close to PwC said: “You don’t go around doing this unless you’ve got a basis for action. I expect things to happen in the next couple of months.”
But a PwC spokeswoman said: “PwC has issued a pre-protocol notice. That means you may or may not sue someone. That’s the way it stands at the moment, but we haven’t committed to any action yet.”
City lawyers, though, believe pension funds could bring similar claims against Watson if PwC initiates proceedings.
Dickinson Dees partner Martin Jenkins said: “Any scheme that uses an actuary that has a liability cap will follow a case like this very closely, and feel obliged to investigate the implications for them.
“Whatever the feelings of schemes and their trustees, I don’t think they can avoid looking closely at this in the same way a number of schemes looked at Merrill Lynch and Unilever.”
Simmons and Simmons solicitor Kirsty Bartlett agreed.
“Trustees in dire financial straits will look for money wherever they can.”
A Watson Wyatt spokesman: “We are confident the work we undertook for Independent was of a proper professional standard and properly carried out on the basis of the information with which we were provided at the time.”
A KPMG spokesman denied the firm had acted improperly and said any legal action would be contested “vigourously”.
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