Aviva scolded by watchdog

AVIVA has received a slap on the wrist from the City watchdog after hundreds of shareholders suffered heavy losses.

The FTSE 100 insurer ‘failed to consider properly its obligations’ when releasing a potentially misleading statement to investors two years ago, the Financial Conduct Authority (FCA) said.

Aviva, which avoided a fine, issued a statement in March 2018 to investors, implying it planned to cancel so-called preference shares by paying investors just £1. The preference shares were trading much higher than that at the time.

Alarmed shareholders, many of whom were ordinary savers, rushed to sell their shares as they thought they would lose out if they waited for Aviva to cancel them. Amid the panicselling, the value of the shares tumbled by up to 26pc, causing investors to suffer heavy losses.

The City watchdog ruled yesterday that the insurance giant had failed to take enough care to prevent misleading statements.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: ‘This was a significant oversight by Aviva that confused the market for preference shares. Firms must ensure that announcements to the market are clear and not misleading.

‘But for Aviva’s prompt clarification and the payment scheme, this case could have led to a financial penalty.’

A spokesman for Aviva said: ‘This was a disappointing episode for which we are sorry and lessons have been learned.’

Aviva shares fell 0.6pc, or 1.6p, to 276.5 yesterday.