FCA considers investigation into Aviva's preference shares plan

Bailey said the FCA is "undertaking a review to establish whether there are circumstances that might require an investigation to be conducted" into whether the plan broke market abuse rules.

Aviva has since scrapped the plans after backlash from shareholders and politicians.

Last week Nicky Morgan, Chair of the Treasury Committee, wrote to Bailey to seek information about the FCA’s approach to Aviva.

Bailey responded: "It is the firm’s compliance with the Market Abuse Regulation1 that is forming the primary basis for the FCA’s enquiries.

"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.

"I would, nevertheless, highlight that our assessment will have to be made in the context of the issue date of the preference shares concerned, the extent to which any marketing materials that may have been used in addition to the prospectus still exist following the original primary securities offering and the prevailing regulatory regime and market standards."

Nicky Morgan commented: “I welcome the FCA’s review of Aviva’s preference shares plan to establish whether market abuse rules may have been broken.

“The FCA rightly highlighted the legal uncertainty surrounding the rights and terms of preference shares. I expect that the Treasury will consider how best to resolve this uncertainty as a matter of urgency."