FCA reviews controversial Aviva share buy back plan

FCA reviews controversial Aviva share buy back plan

The Financial Conduct Authority (FCA) is looking into the way Aviva communicated its plans to cancel preference shares that would have left some investors out of pocket.

In its response to a letter from Nicky Morgan, chair of the treasury select committee, the regulator said it is reviewing Aviva’s actions under the market abuse regulations.

As FTAdviser previously reported, Aviva had intended to buy back around £450m of preference shares at par value, despite the shares trading at a valuation far in excess of that level.

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When Aviva announced the plan, the shares dropped sharply in value, as did the price of the preference shares of other companies.

Aviva later cancelled the plan.

The FCA said the “timing and content” of Aviva’s communications on the issue is the focus of its probe.

Ms Morgan had written to the FCA to query whether Aviva’s actions complied with the listing rules for stock market quoted company.

She particularly queried whether the marketing material distributed to retail investors was appropriate and adequately highlighted the fact the shares could be bought back at any time at par value. 

The FCA said this is one of the questions it is investigating, but added that as the shares have been traded on the stock market for a quarter of a century, it is likely that most of the current shareholders will not be those that received the marketing material in 1992.

The regulator was anxious to emphasise that it has not placed Aviva under formal investigation at this stage, and instead is probing whether a formal investigation is required.