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On 8 March 2018 Aviva plc dropped a bombshell on the market in its own and other UK listed financial preference shares in the form of the following statement on page 9 the company’s results press release:

In 2018, we have signalled our intention to reduce hybrid debt by £900 million. We are targeting more than £500 million in additional capital returns, incorporating liability management and returns to shareholders. In this regard, we have the ability to cancel preference shares at par value through a reduction of capital, subject to shareholder vote and court approval. The preference shares carry high coupons that are not tax- deductible and they will not count as regulatory capital from 2026.

The announcement has caused a disorderly market in £ preference shares with some issues falling over 45% in one day and has wiped well over £1 billion off the value £ financial preference shares which are owned, either directly or indirectly through funds, by a vast number of individuals for whom they form an important part of pension income.

Aviva made no previous public reference to believing the preference shares could be cancelled at par without a class vote of preference shareholders and the market was not otherwise aware of Aviva’s position on the matter. Furthermore:

i. The prospectus terms state The [Preference Shares] shall not be redeemable, save with the approval of the holders of the [Preference Shares] to a variation of the rights of such [Preference Shares]
ii. Aviva’s public website stated that the preference shares are permanent.
iii. Aviva’s Solvency returns state that the preference share capital is permanent.
iv. In May and July 2017 respectively Aviva and General Accident sought and obtained, by special resolution, authority from ordinary shareholders to repurchase their preference shares at up to 105% of the market price which was, then, in the 150-160 range . This was grossly misleading in circumstances where Aviva believed it could cancel the preference shares at nominal value through the passing of a special resolution.
v. For many years the market has priced the preference shares on the basis that they cannot be redeemed without class consent of holders or a winding up of the company. Aviva will have been well aware of this and has taken no steps to inform the market otherwise.

This is an extremely serious matter for a huge number of individual and institutional investors in UK financial preference shares and similar securities. As at the time of writing I have received many requests for assistance and am starting to put together a campaign action group in response.

Update 28 March 2018:

The FCA has issued its response to Treasury Committee Chair, Nicky Morgan. See –

Two particular points of interest –

However, the FCA’s enquiries continue and, 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 will update the Committee, and other MPs who have written to me on this point, in due course.


Furthermore, while the Company’s proposals are not now going ahead, given the impact on the broader market for listed preference shares, and the important role we play in ensuring market integrity, we see value in a broader review of the legal issues that this case has raised along with consideration of how best to ensure a market wide understanding of the rights and terms of preference shares. However, we would note that consideration of legal changes which would prevent the approach proposed by Aviva would not necessarily be within the powers of the FCA.

Update: 23 March 2018

Great news! Aviva announced today that it has decided to take no action to cancel its preference shares. You can read the full announcement at:

What Aviva has done is pretty much what I said they should do when they asked at the end of my meeting on Wednesday.

It is fantastic that investors working together and harnessing the support of the media have achieved such a great outcome. I have co-ordinated several campaigns in the past and this one has surpassed them all in the way investors of all cohorts have worked together towards a common goal. I cannot say too much but Ecclesiastical Insurance in particular have been a true ally as have my media contacts who have really pulled out the stops. Hopefully this will set a precedent for the future.

I feel there is still much work to be done. The wider issue of certainty of the fundamental rights in a whole class of listed shares need to be resolved. As things stand there is nothing stop another issuer such as Lloyds, who I do not trust one bit, having a go. I have discussed with the FCA and will again. Coincidentally the FCA’s Director of Enforcement and Market Oversight with whom I have discussed was formerly a regulator in Australia, where this loop hole has been closed, so is very familiar with the background and why it needed to be done. This episode demonstrates is that regulators cannot rely open the investment banks and magic circle law firms who advise companies with listed securities to act responsibly or in accordance with the clear, established rules of engagement which have been a pillar of the UK market and its status.

There are also issues around how the market was left unaware of the possibility of cancellation of the shares for so long and how the information was released into the market.

Update: 20 March 2018

In response to the large volume of correspondence received Nicky Morgan MP (Treasury Committee Chair) has written to the FCA raising a number of issues and asking a number of pertinent questions. The letter is available online at:

Update: 18 March 2018

The Times reported on 15 March 2018 that the FCA is ‘seeking to understand the basis upon which the firm is taking this action and we are considering whether they have put sufficient information into the public domain.’ And that the has confirmed reaching out not only to Aviva and its advisers but also to those who hold shares.’

On 15 March 2018 Aviva added further information to its website at:

On 17 March 2018 Aviva added further information to its website at:

Contact details for lobbying:


CEO (Mark Wilson):

Investor Relations:

Claudia Arney, Governance Committee Chair
Aviva plc
St. Helens
1 Undershaft


For suggested points and who to send and copy to see my forum post:

Links to key documents:

Aviva plc Articles of Association:

General Accident plc Articles of Association:

Aviva plc 8.375% Preference Shares Terms:

Aviva plc 8.875% Preference Shares Terms:

General Accident plc 8.875% Preference Shares Terms:

General Accident plc 7.875% Preference Shares Terms:

Media Coverage:

Financial Times (21 March 2018) – MPs demand FCA probe into Aviva preference share row

Financial Times (20 March 2018) – Aviva’s board must explain themselves

Telegraph (16 March 2018) – Aviva inflicts £1bn losses on income investors – this is how you can fight back

Financial Times (16 March 2018) – Mark Taber, who campaigns on behalf of preference shareholders, said “I’m not aware of any company planning to cancel irredeemable preference shares before. I’ve never seen institutions so annoyed by anything. It damages trust enormously.”

Citywire (16 March 2018) – Aviva says ‘irredeemable’ status does not mean they can’t be cancelled, as fund managers accuse insurer of treating investors unfairly.

The Times (15 March 2018) – FCA questions Aviva over cancelled shares

Telegraph (15 March 2018) – Aviva preference shares: go ahead with cancellation and you’ll pay more to borrow, investors warn

Insurance Business Magazine (15 March 2018) – FCA intervenes in Aviva preference shares controversy

Global Capital (15 March 2018) – Regulators fix on Aviva’s pref share cancellation notice. The preference share market is in disarray after Aviva asserted that it could cancel its instruments at par.

Citywire (15 March 2018) – Aviva’s preference shares threat will come back to bite
TwentyFour Asset Management’s Gary Kirk warns the insurer will face higher debt costs in future if it cancels high-yielding preference shares.


Global Capital (14 March 2018) – Investors decry Aviva’s pref share cancellation notice

This Is Money (13 March 2018) – Investor panic as Aviva plots to axe bonds paying 8.5%: Insurer may buy back preference shares in bid to save £38m a year

The Times (13 March 2018) – Aviva attacked over plans to cancel £450m preference shares

Citywire Money (13 March 2018) – Aviva threatens to cancel high yield preference shares

Bloomberg (12 March 2018) – A Fight in the Church Pews: Aviva’s plan to cancel its preference shares gets an almighty slap-down

The Times (9 March 20188) – Small investors hit by Aviva bond buyback