The Financial Conduct Authority (FCA) has fined Aviva Investors £17.6 million (€24 million) after finding that the group had failed to manage conflicts of interest adequately, manipulating deals and failing to prevent an “abusive practice” known as cherry picking.
Cherry picking in this case happened when traders on the fixed income desk would delay the recording of a bond trade straight away and wait and see how the position performed. They would then allocate it to the fund with the highest fee. The practice allows traders to benefit financially, as they receive a cut of the fee.
The FCA fine is in addition to £132 million that Aviva Investors had already paid out to funds in compensation, taking the total pay out to almost £150 million.
Despite facing the wrath of the FCA, Georgina Philippou, acting director of enforcement and market oversight at the FCA, says: “The FCA has recognised that its [Aviva] actions since reporting its failings were exceptional. The level of co-operation during the investigation and commitment to ensuring no customers were adversely impacted meant it qualified for a substantial reduction in the penalty.”
The fine would have been £25.2 million, had Aviva not have been so forthcoming with the FCA.
“We fully accept the conclusions of this investigation. We have fixed the issues, improved our systems and controls, and ensured no customers have been disadvantaged,” says Euan Munro, chief executive officer of Aviva Investors.
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