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Aviva fined £17.6m by FCA

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02/03/2015
Aviva Investors has been fined £17.6m by the Financial Conduct Authority (FCA), for “systems and controls failures” that led to £132m being paid to eight funds the insurance giant managed.

Aviva announced it had reached an early agreement with the FCA, and unconditionally accepted the FCA’s ruling.

Two years ago, Aviva Investors identified instances of ‘cherry picking’ by two fixed-income trader staff; the duo had been engaged in improperly allocating and delaying the booking of trades.

However, while the perpetrators were sacked, the firm was deemed culpable for the actions of the traders; on certain trading desks at Aviva Investors, funds that paid differing levels of performance fees were managed by the same desk. The FCA ruled that this structure created conflicts of interest, and incentivised traders to favour certain funds over others. As a result, the firm recompensed £132m to eight funds. While this dented the Aviva’s operating profit for 2013, customers were not adversely affected.

While the FCA concluded that Aviva’s failings were severe, the regulator recognised that the firm’s conduct after the issue was identified was impeccable. Aviva moved to notify the FCA as soon as possible, and proactively co-operated with the investigation. The FCA noted in their ruling that the firm’s exemplary behaviour meant it “qualified for a substantial reduction in penalty.”

“We fully accept the conclusions of this investigation,” said Euan Munro, head of Aviva Investors. “We have fixed the issues, improved our systems and controls, and ensured no customers have been disadvantaged. We have also made substantial changes to the management team which is leading the turnaround of Aviva Investors.”

 

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