The Financial Conduct Authority (FCA) has dropped its investigation into the struggling insurance outsourcer Quindell, enabling the Serious Fraud Office (SFO) to lead its probe into the firm.
Following talks with the SFO, and the SFO’s decision to launch an investigation into the “business and accounting practices at Quindell”, the FCA said it has decided to discontinue its own investigation with immediate effect.
Accounting blunders and misreporting at the company forced the firm to restate its accounts for the year to December 31 2013.
Quindell had to restate a post-tax profit of £83m to a loss of £68m and reduce reported net assets from £668m to £446m.
The Financial Reporting Council (FRC) launched its own review of the company last year.
Its conduct committee reviewed Quindell’s annual reports and accounts, and found problems in the timing and amount of revenue recognised for claims management and related services.
A separate investigation into the work of Quindell’s current and previous accountants, KPMG and RSM Tenon, is ongoing.
Quindell recently published its annual report and accounts for the year ended December 31 2014.
These contained substantial restatements of prior year revenues and profits, including corrections and adjustments in response to issues raised by the FRC. Quindell:
• Revised its accounting policy for claims management revenue recognition and related costs, reducing 2013 revenue by £109m and profit after tax by £130m;
• Corrected the accounting for the acquisition of Quindell by Mission Capital to treat it as a reverse acquisition, reducing goodwill and net assets at December 31 2012 and 2013 by £25m;
• Corrected the accounting for certain transactions entered into with TMC in 2011, which would have reduced revenue and profit for that year by £4m. This has had the effect of reducing net assets at December 312012 and 2013 by £2m.
By Marcel LeGouais