Financial Conduct Authority scrutinising Aviva’s aborted plans to cancel £450m worth of preference shares
The City watchdog is scrutinising Aviva’s proposals to cancel £450m of preference shares, its chief executive has confirmed in a letter to the Treasury Select Committee.
In a letter published this morning, Andrew Bailey said the Financial Conduct Authority was carrying out a review to establish “whether there are circumstances that might require an investigation to be conducted”.
The watchdog’s enquiries are underway, and it is now focusing on the treatment of the holders of the firm’s irredeemable preference shares “that may have lost out financially as a result of these events”.
Shares in Aviva dipped one per cent in morning trading.
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The FCA is not conducting a formal investigation at present.
Bailey wrote:
We will also monitor events carefully, paying particular attention to the treatment of the holders of the company’s affected preference shares during the relevant period and to wider market for similar instruments.
“I will update the Committee, and other MPs who have written to me on this point, in due course,” he added.
MPs had called for the FCA to intervene on Aviva’s plans to cancel irredeemable preference shares, with chair of the TSC Nicky Morgan writing to the watchdog to ask it to investigate how the shares were originally marketed to retail investors and if any rules had been broken.
Last week, the insurance giant backed down on the plans to cancel £450m of high-interest shares after receiving “strong feedback and criticism” from investors.
Boss Mark Wilson said he hoped Aviva’s change of heart will “restore trust” in the company.
Wilson said last week: “To maintain that trust it is critical that we listen to and act on feedback. The reputation of Aviva, and the trust people have in us, is paramount.”
“The board and I have a duty to consider not just the financial implications of our actions,” he added. “We must consider the impact to Aviva’s wider reputation. I hope our decision today goes some way to restoring that trust.”
Read more: Aviva shareholder criticism prompts £450m preference share climbdown