Aviva promised to compensate about 2,000 people who lost money after the sale of their highly-paid last month of the preference shares in the company, when the insurer tried unsuccessfully to cancel them.
Shares in the so-called ‘prefs’ crashed after the FTSE 100 giant said that it may scrap £ 450m of stock to save money, which led to the loss of paper about 1 billion pounds to investors. Later he canceled the plan amid fierce negative reaction from members, Fund managers and pensioners.
Struggling to restore confidence among investors, Aviva said on Monday that it is ‘discretionary goodwill payments’ for those who sold the shares between 8 and 22 March, which will see it pay around £14 million.
“We recognize that while we are considering options for preference shares that have created uncertainty and forced some investors to sell their shares,” said chief Executive mark Wilson. “We hope that this payment of good will go some way to restoring confidence, Aviva.”
Investors were unhappy with plans to sell the shares, because they believed that he bought them as irredeemable that caused a lot of discussion about how preferred shares are sold. M&G Prudential, blackrock & General was among the companies protesting against attempts by Aviva to ditch the stock.
Analyst Gordon for in Barrie cornes said while the insurer is now “doing the right thing” fiasco was a “costly mistake to the detriment of her reputation”, and the initial decision was “ill-conceived”.
Aviva chief Executive mark Wilson said: “we hope the reward is good will go some way to restoring confidence Aviv”.
Lines caused regulated by the financial conduct authority (FCA), which step to see how this kind of Saga can be avoided in the future. In a letter to the leaders, the boss of FSA, Andrew Bailey, said earlier this month that the company issuing the ‘prefs’ need to ensure the conditions are clear.
He said that the business should clearly indicate whether the company may cancel the shares cheaper than the market price and give investors access to the original contract, which can be made up decades ago. Preferred shares “Aviva”, for example, was first released in 1992.
Aviva has appointed big four accountant KPMG to manage the process, with the company providing shareholders entitled to up to six months to file a claim.
“Preferred shares remain a global problem and it has now become clear that the best way forward is the pursuit of regulatory solutions before the expiry of 2026, when the shares no longer count as regulatory capital in solvency II,” Mr. Wilson said.