The FCA said that it has commenced an investigation into Quindell PLC under the UK's Financial Services and Markets Act 2000, in relation to public statements made regarding Quindell’s financial accounts during 2013 and 2014.
In a statement, Quindell said: “The Company also confirmed that it had identified that certain of the accounting policies historically adopted by the Company, in respect of recognising revenue and deferring case acquisition costs in a number of the Group’s disposed of businesses, were largely acceptable but were at the aggressive end of acceptable practice.”
The group has been conducting its own review, advised by PricewaterhouseCoopers (PwC). PwC also identified that certain policies were not appropriate, principally those relating to the noise induced hearing loss cases revenue and related balances that became significant during 2014.
More than 80% wiped off the value of Quindell shares in a 2014, when rumours of the accounting irregularities emerged.
Quindell said that the Group’s Professional Services Division (PSD) will be treated as a “discontinued operation” in the 2014 financial statements (and subsequent periods), and that the change will be to adopt a more conservative and appropriate approach to the recognition of revenues and profits in the PSD. The impact of these changes will materially impact previously reported results for the year ended 31 December 2013 and the six months ended 30 June 2014.”
Quindell has a market capitalisation of £555m and revenues of £400m. It has been restructuring following the sale of its professional services division to compensation claims firm Slater & Gordon for more than £600m (see Reactions passim).
Responding to the FCA announcement, a Slater & Gordon spokeswoman told the BBC the company was always of the view that the accounting policies of Quindell plc were aggressive and that Quindell's historic accounting policies were irrelevant to its valuation of the PSD.
"Our assessment of the professional services division
Quindell is refocusing its business on insurance technology services, which include in-car telematics equipment.