Perhaps anyone following the news about Aviva’s preference shares knows that the Financial Conduct Authority (FCA) has stepped in to try to understand the insurer’s basis for its controversial pronouncement about its supposed ‘irredeemable’ preference shares. Now the Treasury Committee has reached out to FCA chief executive Andrew Bailey to seek answers as well.
“The Committee is receiving a large volume of correspondence regarding statements made by Aviva plc regarding the cancellation of preference shares,” wrote Nicky Morgan MP in a letter to Bailey.
The Treasury Committee chair cited multiple statements made by Aviva, including the one issued on March 17, which said: “Neither this document nor the additional information provided [on March 15] should be taken as a statement of the company’s intent either with respect to any decision to return capital on the preference shares, the mechanism of cancellation or the amount per preference share to be returned, and no inference of such intention should be made. No decision has yet been taken.”
Morgan wants to get Bailey’s “general reflections on the FCA’s approach” to the case, in addition to responses to several questions she posed in the letter. One question read: “Is the FCA satisfied that Aviva management’s intention to cancel these shares at par value was communicated in a manner that was consistent with the Listing Rules, and the Disclosure and Transparency Rules?”
It was also noted that the price of preference shares issued by General Accident and Aviva fell by 20-30% following the first statement, which was part of the company’s results announcement, on March 08.
“I would be grateful for a response by March 30,” said Morgan, who has placed the full letter in the public domain via the Regulated News Service.
