24 February 2015

Aviva Investors fined by FCA

Aviva Investors, the asset management arm of insurer Aviva, has been fined £17.6m ($27.2m) by the Financial Conduct Authority (FCA) as a part of a settlement.

The company said that it had identified historic breaches of regulatory requirements concerning Aviva Investors' dealing controls prior to 2013, which it then passed on to the FCA. It added that it had co-operated fully with the FCA and that it unreservedly accepted the decision to levy the fine.

According to the FCA from 20 August 2005 to 30 June 2013, Aviva Investors employed a side-by-side management strategy on certain desks within its fixed income area whereby funds that paid differing levels of performance fees were managed by the same desk.

A proportion of these performance fees were paid to traders in Aviva Investors' fixed income team who managed funds. This type of incentive structure created conflicts of interest as these traders had an incentive to favour one fund over another, cherry-picking the best payers.

The FCA said that in May 2013, Aviva Investors found evidence to suggest that two former fixed income traders had been delaying the booking of, and improperly allocating, trades. As a result Aviva Investors paid compensation of £132m to eight impacted funds.

The FCA added that Aviva Investors had accepted the settlement at an early stage – the fine could have been around £25m instead of £17.6m if it had gone on for longer.