Aviva censured for breach that sparked share selloff
The financial regulator has censured Aviva for breaching City rules when it threatened to cancel its high-yielding preference shares at below market value in 2018.
The Financial Conduct Authority stopped short of fining Aviva, despite finding a “serious failing” by the insurer over its failure to ensure information disclosed to investors was not misleading.
The case relates to a statement by Aviva in March 2018 that it could cancel its preference shares and pay investors just £1 - far below what the shares were trading at.
The announcement sparked a sell-off by panic investors, leading the price of the preference shares to fall by as much as 26pc.
The company reversed its position days later following a backlash and eventually paid £14m of compensation to savers who suffered losses as a result of its threat.
Mark Steward of the FCA said: “This was a significant oversight by Aviva that confused the market for preference shares. But for Aviva’s prompt clarification and the payment scheme, this case could have led to a financial penalty.”
The FCA itself has faced scrutiny over its investigation into the failings at Aviva. In May, the Treasury Select Committee demanded an update after a long period of silence from the regulator.
A spokesman for Aviva said: “Aviva accepts this decision. This was a disappointing episode for which we are sorry and lessons have been learned.
“We recognise the uncertainty created for preference shareholders two years ago whilst we were considering our options and we subsequently made discretionary goodwill payments to impacted preference shareholders.”
