#SLINGO SUPREME FIX ISSUES TRIAL#

'The loss was caused by a matter - the lack of an effective hedging relationship between the swaps and the lifetime mortgages which they were supposed to hedge - which Grant Thornton negligently failed to appreciate and report to the society and which made its advice wrong,' the court said. The court found that Manchester Building Society had suffered a loss falling within the scope of the duty of care assumed by Grant Thornton, in light of the purpose of its advice. However, a panel of seven justices unanimously allowed the building society’s appeal in a judgment handed down this morning.

#SLINGO SUPREME FIX ISSUES TRIAL#

The Supreme Court was asked to decide whether the society can recover this cost as damages from the accountants, reduced by 50% for the society’s contributory negligence. Both the trial judge and the Court of Appeal ruled that it could not. Manchester Building Society closed out the swaps at a cost of over £32m. It was discovered in the wake of the financial crash that the society could not apply hedge accounting, and the negative swing in its reported profit and loss and capital position compelled it to exit the business model, breaking the swaps and selling the mortgages. The building society relied on this advice, entering into various fixed rate mortgages hedged against long term swaps. Manchester Building Society brought action against Grant Thornton after the accountancy firm negligently advised its client to use a method known as ‘hedge accounting’ from 2006. The Supreme Court has backed a building society’s claim against its former auditor, in a ruling that provides a ‘more generous’ test for the duty of care owed by professional advisers.

Slingo supreme fix issues