FCA investigating Quindell over financial statements

The FCA is investigating Quindell over public statements the insurance outsourcer made about its financial accounts in 2013 and 2014.

The news comes as Quindell expects its revised accounting practices to “materially impact” previously reported results for the full 2013 year and the first half of 2014.

Quindell said in a statement this morning that it would “co-operate fully” with the regulator’s investigation.

The FCA said it will liaise with other agencies as appropriate regarding the investigation.

It added that it would not be making any further comment during the investigation.

Quindell has also suspended trading in its shares on the London Stock Exchange’s Alternative Investment Market (AIM) until auditing of its 2014 financial results is complete and the results are published.

The outsourcer said in a statement that it expects trading in its shares to resume “as soon as practicable and no later than publication of the group’s 2014 financial statements”.

‘Aggressive’ practices

The FCA probe follows a review by accounting firm PricewaterhouseCoopers (PwC) into Quindell’s accounting practices.

Quindell revealed in March that the PwC report had found that the way Quindell recognised revenue and deferred certain acquisition costs was “largely acceptable” but “at the aggressive end of acceptable practice”.

Quindell said in a statement this morning that the PwC report also identified certain policies that were not appropriate, mainly those relating to revenue from to noise-induced hearing loss cases and related balances in Quindell’s Professional Services Division.

The Professional Services Division has since been sold to law firm Slater and Gordon, and so will be treated as a discontinued operation in future Quindell accounts.

Even so, Quindell said that it will now adopt a more “conservative and appropriate approach” to recognising revenues and profits from the division in its accounting.

It said the changes will “materially impact” previously reported results for the full 2013 year and the first half of 2014.

Transaction review

Quindell also announced this morning that it has begun a review, along with its auditors, of a number of its historic transactions and acquisitions.

The outsourcer said: “This work is on-going, but the company expects that it will shortly be in a position to announce additional information in relation to these transactions and acquisitions with a view to ensuring that more complete information is available in respect of the historical position; to ensure that any related party transactions are fully disclosed; and make associated corrections.”