The FCA has launched a review to examine if Aviva‘s plan to cancel its high yielding preference shares broke market abuse rules.
Investors pressured Aviva to scrap its plans to cancel £450m of high-yielding preference shares at par value, Last week the insurer said it was not going ahead with the plans. Cancelling the plans means the shares will no longer count as regulatory capital from 2026.
In a letter to Treasury select committee chair Nicky Morgan, FCA chief executive Andrew Bailey said the move from Aviva could potentiall fall foul of market abuse regulation.
Bailey said the FCA wants to understand “the basis upon which Aviva was acting, including the clarity of the information available to securities holders”.
He said: “As such we asked the company to provide the further information on its website in the week commencing 12 March along with the market integrity concerns that the proposals raised”.
Bailey said the regulator welcomed Aviva’s decision to abandon such plans but it will continue to investigate the firm.
Bailey said the FCA is “focusing on the treatment of those holders, and potentially now former holders, of the company’s irredeemable preference shares that may have lost out financially as a result of these events.”
The FCA intervention comes after Morgan wrote to Bailey on 20 March to ask about the FCA approach to Aviva’s decision but the FCA was unable to respond at the time. However, Bailey said the FCA knew “that a number of holders of the securities have indicated that they were unclear about the circumstances in which a reduction in capital could occur”.