Merrill Fired - Legal Action Possible

The fund manager looked after around a quarter of the Co-op's £2bn pension fund and the move ends a 30 year relationship between the two parties. The Co-op was also concerned about the number of senior fund managers who have recently left the firm.

Co-op secretary and trustee of its pension scheme, Nick Eyre, was quoted by FT.com as saying that the group was 'unhappy' with Merrill's investment performance for some time. He also said: 'In view of the recent exodus of key managers from Merrill and following specialist advice, we have decided to dispense with their services.'

In order to settle a court fight last year, the fund manager agreed to pay £70m to Unilever's pension fund. The pension fund sued due to claims of poor investment performance by the firm. Merrills settled without admitting liability.

It is now thought that this case may well open the floodgates to other similar claims. Sainsbury's, AstraZeneca and Surrey County Council are all thought to be considering legal action.