Aviva is being probed over possible market abuse after a move that could have triggered huge losses for thousands of investors.
Regulators are investigating the insurer’s plans to cancel £450m of high-yield so-called preference shares for less than their market price.
Although Aviva last week abandoned the proposal, which would have saved it £38m a year, the Financial Conduct Authority (FCA) is pushing on with a review to determine if any rules were broken.
Probe: Regulators are investigating the insurer’s plans to cancel £450m of high-yield so-called preference shares for less than their market price
Aviva’s preference shares were created in the 1990s to raise money for expansion, and pay out as much as 8.5 per cent of their value every year.
They had been trading at around 175p when Aviva announced earlier this month that it was preparing to buy them back for their face value – of 100p each.
It sent Aviva’s preference shares crashing and sparked a wider sell-off of preference stock at other finance companies, such as Natwest, as traders panicked that they might follow suit.
Furious savers demanded a rethink, which triggered a climbdown by Aviva boss Mark Wilson.
FCA chief executive Andrew Bailey, in a letter to Tory MP Nicky Morgan, the chairman of the Treasury select committee, said that his key focus will be understanding whether it was clear to investors that their shares could be cancelled, and whether the firm’s actions posed risks to the market.
Aviva declined to comment.