March 28, 2018 / 9:12 AM / a year ago

UK watchdog conducts review into Aviva over preference shares

LONDON, March 28 (Reuters) - Britain’s markets watchdog will review Aviva’s treatment of holders of its preference shares following the insurer’s abandoned plan to cancel the shares, to see if any shareholders lost money as a result, it said on Wednesday.

The preference shares , which give holders fixed dividends that take priority over ordinary share dividends, fell sharply after Aviva said earlier this month it might cancel them below their value.

The shares recovered after Aviva said on Friday it would not go ahead with the plan, following complaints from shareholders and the British parliament’s treasury select committee.

“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,” the FCA said in a letter to the treasury select committee.

“We are undertaking a review to establish whether there are circumstances that might require an investigation to be conducted.”

The FCA said it was also looking at whether the way the FTSE 100 insurer’s plan was communicated was in line with listing, transparency and disclosure rules.

Preference shares issued by other financial firms such as LLoyds and Standard Chartered fell across the board as investors worried that the firms might follow Aviva’s lead in finding a way cancel the shares, which are generally described as irredeemable.

The FCA said it saw “value” in a broader review of the legal issue raised by the case, but it added that legal changes might not come within its remit.

Aviva declined to comment.

Reporting by Carolyn Cohn, graphic by Alasdair Pal, editing by Alexandra Hudson

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