Manchester Building Society launches claim against auditors

The Manchester Building Society is to launch a legal claim against their former auditors, Grant Thornton, for an amount believed to be approximately £49 million.

 

The suggestion is that the claim represents Breach of Statutory duty, Negligence and Breach of Contract.

 

The period during which the claim has been brought represents 2006 to 2013. The latter period represents the point the auditors resigned.

 

A statement from the Building Society reads, "The claim primarily covers Grant Thornton's advice and audit services relating to the implementation and application of hedge accounting by the Society. If the Society is unable to reach satisfactory agreement with Grant Thornton the matter will progress to a court hearing."

 

The Mutual is stated as the UK's 19th largest building society and has in excess of 19,000 savers and 3,300 borrowers.

 

A spokesman for the auditors commented, "As a large professional services firm, there are inevitably occasions where we become involved in legal claims. Naturally, our obligations of confidentiality mean that we cannot comment on the detail of any litigation in which the firm is involved."

 

The trigger for this claim appears to be a matter being investigated by the financial watchdog (the Financial Reporting Council) since 2013.

 

The core matter revolves around interest rate swaps which were seemingly used as a mechanism to offset the lenders risks on it's fixed rate mortgages. In light of this the Building Society reversed it's accounts from showing a £600,000 pretax profit in 2011 to a £21.9million loss.