FCA fines Aviva Investors £17.6m

FCA fines Aviva Investors £17.6m

The FCA has fined Aviva Investors Global Services £17,607,000 for failures in its systems and controls which meant it did not manage conflicts of interest fairly.

The insurance giant’s investment arm also paid out £132m into eight funds as compensation.

According to a statement from the City watchdog, from 20 August 2005 to 30 June 2013, Aviva Investors employed a side-by-side management strategy on certain desks within its fixed-income division. This meant that funds that paid differing levels of performance fees were managed by the same desk.

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A proportion of these performance fees were paid to traders in Aviva Investors Fixed Income area who managed funds. This type of incentive structure created conflicts of interest as these traders had an incentive to favour one fund over another.

The FCA statement acknowledged that Aviva Investors had identified this and recorded it in its conflict log, and that the firm had found evidence to suggest that two former fixed-income traders had been delaying the booking of, and improperly allocating, trades.

After this, it took action to prevent such failings in the future, and paid compensation to the funds.

Georgina Philippou, acting director of enforcement and market oversight at the FCA, said: “While Aviva Investors’ failings were serious, the FCA has recognised that its actions since reporting its failings were exceptional.”

Because Aviva Investors settled early, it qualified for a 30 per cent discount. Without this, the fine would have amounted to £25,152,900.

Right to reply

Euan Munro, chief executive of Aviva Investors, said: “We fully accept the conclusions of this investigation. We have fixed the issues, improved our systems and controls, and ensured no customers have been disadvantaged. We have also made substantial changes to the management team, which is leading the turnaround of Aviva Investors.

“We have a clear focus on simple and specific investment outcomes for clients, and are delivering strong levels of investment performance within a robust control environment.”