Scottish Widows are likely to face a compensation claim of up to £1bn, over advice it gave to 100 company pension schemes.
A dossier prepared by the independent consultant Actuarial Review Company (ARC) for the FSA, claims that negligent advice cost the schemes £300million.
The report claims that Scottish Widows advised clients to move from guaranteed annuity funds to the higher risk Scottish Widows managed fund, during the stock market boom of 1999-2000.
The report claims that incentives were used to encourage clients to switch funds, which would leave them exposed to the stock market and subsequent crash in share prices.
The cost of restoring the benefits would be around £1bn says the report.
A High Court action is expected to be started in the coming days.
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