Lyonnais settlement was a “commercial decision”
UK – Credit Lyonnais’ legal advisor says the settlement with Watson Wyatt over alleged negligent pension advice was a “commercial decision” by the French bank.
“A settlement was reached, it was a commercial decision on the Credit Lyonnais side,” Neil Smith of law firm Taylor Wessing told IPE. He said Lyonnais’ current owner Credit Agricole wanted to “draw a line under the old Credit Lyonnais business”.
Lyonnais had filed against Watson Wyatt at the High Court in 2003. One of the claims was that the consultant had been negligent in the evaluation to the UK pension scheme’s funding level.
Yesterday Watson Wyatt spokesman Bruce Wraight told IPE: “The Credit Lyonnais case has been dismissed, with no payment made to either side.” The trial started on May 12 and lasted a day and a half.
The comment came after the two firms put out a release saying that as a settlement had been reached, no payment had been made in respect of outstanding claims.
Taylor Wessing’s Smith, who has advised the trustees of the Credit Lyonnais UK scheme for about five years, said that the basis for the consultant’s evaluation used in 1996 and previously was “very optimistic”.
Smith said that as a result of the “aggressive” evaluation low contributions were paid to the UK pension scheme, while employees received high bonuses.
He explained that another claim brought to the High Court alleged that as a result of the evaluation, a number of discretionary benefits such as early retirement were granted.
“The scheme was valued in ‘96 by Watson Wyatt as being heavily in surplus. When it got to 1999 it was heavily in deficit and there has been no advice to the company between those years,” Smith said.
He also said that although the parties had agreed on no payment on outstanding claims there has been payment on an earlier claim. The decision was made “some time ago.”
“It is all part of the case. It was one of the claims within the claim,” he said. Watson Wyatt’s Wraight said the payment was not connected to the claims brought to court.
The Credit Lyonnais scheme is currently assisted by Punter Southall & Co.