In a letter to Treasury Select Committee chair Nicky Morgan, FCA chief executive Andrew Bailey said the “primary basis” for an enquiry was to assess Aviva’s compliance with the Market Abuse Regulation.
But Bailey stressed that at this stage the FCA was not conducting a formal investigation under the Financial Services and Markets Act 2000.
Aviva first announced on 8 March that, having received clear legal advice, it could cancel the preference shares at par value. It said the decision had been driven by regulation which states the preference shares will no longer count as regulatory capital in 2026.
However, the insurer backtracked on the £450m ($634.8m €514m) plan after receiving “strong feedback and criticism” from investors.
Bailey said: “Our immediate concern had been to understand the basis upon which Aviva was acting, including the clarity of the information available to securities holders (and 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. “
The FCA’s letter comes in response to Morgan who wrote to the FCA on 20 March outlining concern over Aviva’s announcement and seeking clarification on the FCA’s stance as a regulator.
Bailey added: “The FCA welcomes the fact that the company has since clarified the position in its announcement on the 23 March 2018 and Mark Wilson’s statement that “preference shareholders can rest secure in their holdings”.
“However, the FCA’s enquiries continue and, in particular, we are 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.”
Bailey said he will update the Treasury Select Committee, and other MPs who have written to him on the matter in due course.
