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Aviva threatens to cancel high yield preference shares

Preference shares tumble on news insurer may seek to cancel high-yielding investments, sparking protest from activist Mark Taber.

Aviva threatens to cancel high yield preference shares

Thousands of investors in Aviva (AV) preference shares have been dealt a blow after the insurer signalled it may seek to cancel the high-yielding investments.

The insurer revealed it is considering cancelling £450 million of preference shares, which will save it £38 million a year in coupon payments.

The shares feature high fixed dividends of between 7.875% and 8.875% and their strong yields had led to them trading at high premiums to their 'par' values, or issue price.

Aviva's threat to cancel the shares at par value, announced alongside  full-year results on Thursday, sent them tumbling. Aviva's 8.75% preference shares are down 30.7% since the announcement, while the 8.375% shares have dropped 28.8%.

Preference shares issued by General Accident, the car insurer which merged with Aviva predecessor Norwich Union in 2000, have also been hit by the news. Its 8.875% preference shares have fallen 30.3%, with the 7.875% shares dropping 22.1%.

Aviva warned in its full-year results that it had 'the ability to cancel preference shares at par value through a reduction in 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.'

Bond expert and investor activist Mark Taber of Fixed Income Investments has written to Aviva on behalf of the 580,000 retail investors who could see their incomes hit.

He said that the insurer had made ‘no previous public reference to believing the preference shares could be cancelled at par without a class vote [of the holders]’ and that the prospectus stated they ‘shall not be redeemable, save with the approval of the holders’.

Taber criticised the insurer for the way it has gone about trying to redeem the preference shares, involving ordinary shareholders who are likely to vote for redemption in order to save £38 million in coupon payments and whose votes outweigh those of the preference shareholders.

Taber added that ‘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,’ he said.

The news also knocked the broader preference shares market. Insurer Ecclesiastical, whose preference shares dropped 11% on Aviva's announcement before rebounding, issued a statement to the market yesterday reassuring investors.

'Ecclesiastical notes Aviva's governance statement that "as one of the biggest companies in our sector, we aim to make our industry work better for everyone",' it said.

'Ecclesiastical trusts that Aviva will follow the principles set out in that statement when considering whether to pursue this course of action.'

Ecclesiastical is also a holder of Aviva and General Accident preference shares, but said the holdings were 'not material in size in the context of Aviva's announcement and Ecclesiastical's balance sheet strength'.

The situation with Aviva mirrors that of Lloyds (LLOY) in 2016, which bought back £3 billion of bonds from investors but not before a Supreme Court battle.

The ‘enhanced capital notes’  paid a generous 10% interest but the court ruled that the bank was within its rights to redeem them despite a campaign headed by Taber to prevent it from doing so.

56 comments so far. Why not have your say?

Norman E

Mar 13, 2018 at 09:06

I hold all three of the securities, all bought at prices higher than par, and Aviva ordinary shares. I am appalled that Aviva are seeking to use the votes of one class of shareholders against another class. Only a company with no moral compass would consider this to be anything other than fraud when the holders of the shares thought that they were protected by a requirement that they alone would have to vote for any change in their rights.

The prospectus I have looked at has some convoluted wording regarding the pricing of any redemption other than in a winding up, relating the price to the greater of par and a formula relating the price to the yield on the now defunct 3.5% War Loan. That may avail us nothing.

When John Lewis wished to redeem preference shares they did so at par for 5% shares and at a 50% premium for 7.5% shares. Aviva need to make a redemption offer at a suitable premium, give up this matter entirely.

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Mar 13, 2018 at 09:44

Aviva is undergoing a "reduction in capital", in which case section 4(iii) applies (at least in the 8.375% CU share prospectus) and specifies a redemption value of par plus any outstanding accrued dividend. However, the plain reading of sections 4(i) and 8(iii) is that the shares may only be redeemed if a majority of the holders of the preference shares themselves agree.

Of course, corporate lawyers earn a lot of money from convincing judges that the plain reading is not the intended one. One case that comes to mind was, I think, to do with guaranteed annuity rates, where it was ruled that the guarantee would only have been legally binding if it had been spelled in the pension contract with a capital G.

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John Lumbroso

Mar 13, 2018 at 09:54

I believe this is down right robbery. I am 87 and rely on the income and invested

mainly because they were so called IRREDEEMABLE

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Mar 13, 2018 at 09:56

Ouch! Pref shares were ~20% of my retirement portfolio, massive hit taken already. Fool for thinking 'Irredeemable' might have had any meaning to scum like Aviva I suppose.

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Mar 13, 2018 at 11:23

Having followed the Coop shenanigans of last year when Noteholders were required to accept up to 45p in the £ and the earlier cancellation of Lloyds’ ECNs - both with the consent of the courts and with our regulators doing absolutely zip, pref. holders might as well accept that the game is up. If Aviva are of a mind to see this through - and they will have considered all the possible consequences before the announcement - then they will. This is following the Lloyds Bank template. First step was to make the announcement and thereby reduce the market price. Any buyer now is on notice of the possibility. Step two: Instruct the lawyers. And by the way, who is going to stop them? Mark Taber cannot be expected to take this on alone. He will need support of all kinds, including a fund for legal and other costs. And most likely some clever counsel will find some obscure precedent and the Courts will find in favour of Aviva. Let us also bear in mind that someone will be paid a big bonus on successful completion. Am I cynical. Too right.

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Norman E

Mar 13, 2018 at 11:40

The best hope is to convince the big and small ordinary shareholders of the injustice they will be asked to vote for. If the big pension funds tell Aviva that they will not vote for this scheme, it will go away.

If Aviva want to cancel the preference shares they can do so by buying them in the market, something their announcement has now made much cheaper. The cynic in me says they may be doing so, will buy themselves a majority, and then vote to cancel the rest at par. Their threat to reduce capital in this way might just be a ploy to enable them to buy up the preference shares cheaply. At the current prices they could buy half at about a 22% premium and then get the rest at par.

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Andrew Hill

Mar 13, 2018 at 11:49

Surely that constitutes market manipulation.

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Norman E

Mar 13, 2018 at 12:14

It probably does, but the prices of all three have gone up a little since the first fall after the announcement. How can we find out who is buying?

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William jones via mobile

Mar 13, 2018 at 14:28

I'might a novice, I have held General Accident 8 7/8 for more years than I can remember. What exactly does par mean

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philip baker

Mar 13, 2018 at 14:35

I have written to the FCA about Aviva market manipulation and allowing or creating a false market in securities. If every holder writes to the FCA they might even look at this. Due to the poor FCA reporting structure i had to report this as a scam.

Also a letter direct to Aviva, one to my MPand happy to help support Mark Taber.

He got a good deal with bank of ireland a good deal on bradford and bingley. Mark has the patience and ability to deal with these things.

I myself am in favour of direct action, a lobby full of pensioners at Aviva head office, cameras from the BBC or someone with a camera to record for youtube might make the money grabber at the top on £4 million a year think again, want to save money slash the bonuses for the money grabbers at the top.

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Alan Parks

Mar 13, 2018 at 14:37

It is a moral issue.

Aviva’s threat to cancel its prefs at par will raise questions in many minds. Not least if clients and policy holders fear that they too will be treated with disdain if preferred share holders can be so treated and Aviva “gets away with it” as commentators suggest they may.

But will they get away with it? Will there be unintended consequences? For example; will the EU be happy to give morally bankrupt financial institutions a passport to trade in the EU after Brexit. This may affect all of us. The EU will be watching.

As of 27th Feb. Aviva issued over 4000 m ords at 25p each to trading on which they pay a dividend of 27.4p (a coupon of 109.6% - try cancelling those at par ;-)) draining abt.£1100 m from the business. The pref dividend is less than 4% of that; little reward for such a big risk!

Is there no one on the board of Aviva to stamp on this “clever Dick” who thinks he or she can score points over the, mainly, prudent elderly savers who gave him or her birth but now only seek to preserve capital ?

Is there not a non-exec to warn of damage to image and reputation, to question if this will derail the acclaimed recovery from a choppy past, to advise that credibility is hard earned but easily lost by a lapse in morality? Morality trumps legality and this is a moral issue.

Is Aviva irredeemable?

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Norman E

Mar 13, 2018 at 15:35

I too have reported this as a "scam" to the FCA but have little faith that a body I regard as seriously incompetent will do anything, after all its not a small IFA firm that they can bully. Philip Baker, I would be interested to know who you wrote to at Aviva. I will do the same.

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philip baker

Mar 13, 2018 at 16:39

Hi, Norman I wrote to the 2 arch villains at the top. Mark Wilson and Tom Stoddard.

However reading what Alan has put above perhaps I should be writing to all the directors. Putting the moral case.

Perhaps preference holders should suggest cancelling the ordinary shares at par, I know that is rubbish, but that is what I feel Aviva are doing to us.

I hold many GACA shares as I am on the cusp of reaching the age where I can retire. I have always reinvested the dividends, so the last dividend was invested at 175ish.

My original plan was that as these were fixed income they would help pay me a good pension income in retirement and could be left for my kids as they were irredeemable.

I really thought I had read the prospectus and understood what I was buying.

Just had this email response from Aviva

Thank you for your email to Mark Wilson and Tom Stoddard, who have asked me to respond on their behalf.

As you have identified, in our 2017 full year results it was noted that we have the ability to cancel the Preference Shares issued by Aviva plc, at par value (plus accrued interest and any arrears) through a court approved reduction of capital, subject to the approval of ordinary and preference shareholders voting together. This mechanism is distinct from a redemption and has been a feature of the Preference Shares since they were issued.

As reported, Aviva has around £2bn of surplus capital to deploy in 2018 and is considering its options in this regard. The Board included reference to the Company’s ability to cancel the preference shares following a reduction of capital in the 2017 Results announcement as this is one of the options under consideration. The Preference Shares have a high coupon which is not tax deductible and will not count towards the Company’s regulatory capital from 2026 and the Board needs to consider how best to balance between the respective interests of ordinary and preference shareholders. However, no decision has yet been taken on which option to pursue. If and when a decision is taken, we will make the appropriate market announcements. In the meantime the Preference Shares will continue to attract the stated dividend.

Thank you for writing and advising of your concerns. The Board will, of course, take into account shareholder views when considering the options available to the Company. Should there be any further developments in respect of the Preference Shares we will of course advise all shareholders.

Kind regards

Roy Tooley | Head of Secretariat – Corporate & Board Governance

Please would everyone with Aviva, preference shares or otherwise email the board and let them know your feelings now. Please give this as wide spread coverage as possible.

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Andrew Vincenti

Mar 13, 2018 at 17:35

Let’s see what the Fraudulent, whoops sorry the Financial Conduct Authority will do - no doubt as usual sweet effa. And of course the courts will rule, if called upon, in favour of Aviva. After all, the Establishment must look after itself. Looked at those pref shares, but never bought them.

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philip baker

Mar 13, 2018 at 17:43

my response to Aviva, please publicise as much as possible, power to the people.

Good afternoon,

Roy Tooley,

Thank you for your response on the preference shares.

I note in your email you state. "subject to the approval of ordinary and preference shareholders voting together."

In the preference share prospectus i can find no mention of this.

The prospectus seems to clearly state the opposite. " any change must be voted on by preference shareholder" redemption is the most significant change is it not?

The prospectus makes no mention of ordinary and preference shareholders voting together. Can you please clarify this for me?

If preference share are going to stop being regulatory capital in 2026 should Aviva and other companies with preference shares, not join together to stop this absurd change as preference shares are very stable capital.

I and other preference share holders would be happy to join you in lobbying parliament and our own MPs on this issue.

Please would you provide me with email addresses for all the board members as i would like to address the preference share issue with all the board members.

I do not know if the company has been reading what preference share holders are saying but there are a large number of very upset and scared preference shareholders. All of us are hoping for more clarity, is this the end for us? Is this the end of stable income? For those of us who have been buying the shares at above par for years why when the shares went above par in 2009 were holders not advised then that the company might buy them back for £1 this would have kept a lid on the price and i would not have kept reinvesting my dividends for the last 15 years.

My most recent investment was happily made at 175 giving me a 5% return about the same as you get on ordinary aviva shares. This is not a high coupon based on the price i was paying.

You might note that Aviva ordinary shares have a price of 25 p each at par and the dividend is over 100% of this price, so some of the arguments about high coupon do not add up when we look at the real market price of just a few days ago.

I am hoping the company restores order and makes a statement that Aviva will never try and force a sale of preference shares at £1.

The fairest and most moral way to redeem these preference shares, if the company feel that is appropriate would be to buy in the market or to make an open offer at the prices of a few days ago.

I do not know what Aviva would morally have to do for those people panicked out of the shares.

I look forward to your further responses and i look forward to your help in making it easy for preference shareholders to contact the board with there heart felt concerns.

Kind regards

Philip Baker

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philip baker

Mar 13, 2018 at 17:47

Response so far from the FCA

Every single holder should be taking action.

Contact your local news, national news, the newspaper you read, posting on facebook etc,

Dear Mr Baker

Thank you for your email below raising concerns over Aviva Plc’s proposed treatment of its preference shares. We will review the issues that you have raised and respond in due course.

Yours sincerely

Market Integrity Unit

Primary Market Oversight / Enforcement and Market Oversight Division

Description: cid:image001.png@01D2A7C9.64DDD390

25 The North Colonnade

Canary Wharf


E14 5HS

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Description: Description: image003

Submitted on Friday, 9 March, 2018 - 21:18

Submitted values are:

Type of scam: : Share fraud

Name of the firm you are reporting : Aviva plc

All contact details you have for the firm :

Mark Wilson , made comment that the company would redeem irredeemable shares for £1 (par). This person has caused preference shares in General accident and aviva to collapse. It has unsettled many other preference shares. I worry that this is market abuse it has caused me significant losses, i do not feel any financial company should act in this way.

I find it extraordinary that given the confusion that has been caused, including the spillover into other preference shares, that Aviva has not sought to make any clarifying statement. They have created an extremely volatile market in which investors have little clarity or insight into the basis on which they may be trading.

How did they contact you? : i saw the news on a website

When did they contact you? : Thu, 08/03/2018

What product/service were you offered? :

made comment that the company would redeem irredeemable shares for £1 (par). the shares were £1.75


Why do you think it is a scam? : they are trying to buy irredeemable shares for less than they are worth.

If you were asked to transfer money, tell us exactly what you were asked to do. :

Please provide full details of any bank accounts you were asked to pay your money to, including sort code, account number and account name. :

Upload any documents you have received from the firm :

Your details :

Your details

Your name : philip baker

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Tim Blaxter

Mar 13, 2018 at 17:56

4.3 says it all...Aviva can all this a 'return of capital' and only pay out par

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Andrew Finbar via mobile

Mar 13, 2018 at 17:59

I agree this is clearly a scam. If the EU and for that matter the USA see how retail investors can be treated without any protection from governing bodies post brexit then we are going to have a very short lever of leverage indeed when it comes to allowing any British financial institution any form of unfettered access to their markets. I am a great believer in Karma. What comes around goes around.

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William Phillips

Mar 13, 2018 at 18:10

The court's perverse judgement in the Lloyds ECN affair evidently emboldened Aviva. Terrible PR, though.

Nice bit of discreet knuckle-rapping by Ecclesiastical.

Get behind Taber. If anyone can win this fight, he can.

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Garth Nicholson

Mar 13, 2018 at 18:12

If the Lloyds ECN case is anything to go by Aviva Pref holders are fighting a losing battle. When it gets to Court the learned Judges and the Golden Circle Lawyers will dance round the niceties of some spelling in the prospectus and Aviva will win the day. 'Drafting Infelicity' was the phrase invention used in the Lloyds case.They are following exactly the path of the Lloyds ECN case, starting by devaluing the shares by their announcement and the FCA will look on from the sidelines and do nothing. I don't hold AV.A but I hold many other pref shares that this will reflect badly on. I do hold AV. ordinaries and as such would vote against the motion as I do not believe that Aviva being allowed to get away with this does anything for their reputation nor the even more important reputation of British Law.

Make sure all holders vote at the meeting that will be called.

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philip baker

Mar 13, 2018 at 18:19

If we do not stand we will fall.

If these preference shares go, few others will be worth holding at above par as at any moment they could be cancelled. For par plus interest.

Had these shares been trading at 50pence in the £1 would Aviva have made the same statement or would they have quietly bought them in the market and cancelled them?


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Garth Nicholson

Mar 13, 2018 at 18:42

I realise that this will make no difference to the outcome but anyone who understands investments will know that preference shares do not pay interest, they pay a dividend. Strangely the term is used incorrectly by Aviva themselves, who also don't understand the difference in terminology. Let's hope the Golden Circle lawyers don't manage to somehow turn this infelicity against the holders.

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bar chid

Mar 13, 2018 at 19:03

I am not a holder of these prefs, but I am a policyholder of Aviva & I take the simplistic view that if they wriggle out of a prospectus as they are trying to do, how reliable can I believe my policy may be in the event of a claim ?

Upon renewal it will be with a different company, more expensive or not.

Insurance is a trust business, perhaps Aviva do not believe that anymore ?

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Frank 1

Mar 13, 2018 at 20:29

Completely agree bar chid, have a house policy with them too, which now doubt its value. If Aviva are serious about the tax and regulatory capital issue then they should work with the regulator, heaven forbid that useless lot, to create something these prefs can be rolled into that will satisfy those points and maintain the same yield for holders

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Frank 1

Mar 13, 2018 at 20:36

From past experience, I strongly suggest all holders register themselves with Mr Taber, as his efforts for the small guy are beyound reproach

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Paul Nash 2

Mar 13, 2018 at 20:44

Indeed bar chid. Why would anyone trust a company that scams its own members? One more company, along with Lloyds for my "avoid" list I think.

I don't think I am affected, but might be if I hold any funds that holds Aviva preference shares. I wonder if any Aviva funds hold them? Probably not, no doubt given advanced warning of this.

There should be clauses in company articles of association and prospectuses that provide protection in cases like this. Trouble is, if badly drafted, such clauses can be exploited by ruthless individuals. Preference share holders are typically entitled to par value in the case of a company being wound up. This is a protection put in to make sure preference share holders are paid ahead of ordinary shareholders in case of bankruptcy, etc. It is not supposed to be used by companies to cancel preference shares as and when they feel like it. Redemption and call clauses provide for cancellation, but if no redemption date or explicit call options are specified, it should not be possible to cancel shares other than by a company buying its shares in the market, or class shareholders approving a modification of terms.

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Garth Nicholson

Mar 13, 2018 at 20:48

Frank 1's comment is most relevant.. Contact Mark Taber at his website here, he has the name Old Boy Returns:-

Read the section on the Aviva Prefs, it's some 19 pages long. Mark works tirelessly on these sort of causes and needs all the support he can get.

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andrew moffat

Mar 13, 2018 at 23:17

I have just read this article and am horrified. As a holder of Aviva Ordinary, I will certainly vote against such a proposal but fear many institutions will do the opposite. We have, here, an issue of moral compass and this is particularly poignant given that this company is involved in savings' products.

I suggest preference shareholders write to the Non-Executive Directors, whose specific task is to attend to the interests of shareholders, over and above the strategy of the company.

If Aviva wish to cancel these shares, either they should purchase in the market or make an offer at the market price plus, say 2%.

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Dick Turpin via mobile

Mar 14, 2018 at 06:38

Highway robbery! ‘Stand and D’Aviva’!

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Mar 14, 2018 at 09:38

I have a DC pension pot with Aviva that I will be moving elsewhere ASAP. Who knows what else they think they have a right to confiscate on the slimmest of legal excuses?

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G. Shaw

Mar 14, 2018 at 12:46

I definitely think it’s worth informing Aviva, that if they go through with this ‘robbery’, that I will NEVER buy any product from them in future.

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Mar 14, 2018 at 14:14

Well, I hold none of the Aviva prefs, but this communication has dropped the value of my Lloyds, Santander and Stan Chart prefs by over £20,000! So this is even more of a disgrace than at first appearance.

It really shows the long term knock effect the Lloyds ECN decision, and lack of regulatory action from the FAC, is going to have on the UK prefs market.

What next?

Compulsory buy back of shares at nominal?

I will be selling my Aviva shares and will never buy an Aviva product again.

The investable financial services market for shares and products is going to get smaller over the next few years, as we progressively boycott these companies (but will ultimately make no different as the institutions will just take up the slack, buying each other's shares as small investors depart)

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andrew moffat

Mar 14, 2018 at 14:43

Interesting comment from TonyN. Probably, pref shareholders across the board should join forces on this.

The Lloyds situation, whilst unacceptable, is not quite a parallel case. Lloyds was on the brink of collapse.

I wonder whether representations to the London Stock Exchange might be worthwhile.

Clearly, Aviva depends upon savings' flows. That it is prepared to destabilise the interests of its own pensioners, who are shareholders in its preference stock, demonstrates a remarkable insensitivity. It must be prevailed upon to issue a statement that it will, under no circumstances, embark upon the immoral action it suggested.

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Mar 14, 2018 at 15:01

Andrew, to be fair, Lloyds were in no way anywhere near the brink of collapse - in part because people bought the very ECNs they then cancelled, shafting all holders last year.

This is very comparable - Aviva issued these prefs when they needed money. Presumably the very best rate they could get at that time was those offered in these prefs, issued as ostensibly perpetual.

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Mar 14, 2018 at 15:20

I have written to the FCA, pointing out the effect this communication has had on other Prefs.

I guess the thing to do now is to write to Lloyds, Santander and Standard Chartered to ask for their future intentions!

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Mar 14, 2018 at 15:20

An orderly capital restructuring, that fully respects the capital hierarchy, when an institution is in trouble is one thing. With the Lloyds ECNs and these Aviva prefs, the executives just want some extra bonus to trouser, and shafting a few 100k retirees is (to their eyes) a perfectly acceptable way to achieve this.

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andrew moffat

Mar 14, 2018 at 15:28

Lloyds was on the brink of collapse in 2008, however reneging upon moral obligations is unacceptable - in Lloyds case, on the basis of some fine legal nicety, argued by a clever lawyer..

The Stock Exchange should make a ruling on this, to prevent this type of conduct re-occurring and the uncertainty it brings.

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Mar 14, 2018 at 15:52

Yes, that was my point. on the brink of collapse when they issued the ECNs which helped save them, but not when they cancelled them when they felt too expensive.

If I had a lloyds fixed rate mortgage, or if Aviva did them, I wonder if they would allow me to cancel it if rates fell later on?

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Mar 14, 2018 at 15:55

I don't think there is any point in asking Lloyds given their previous despicable behaviour. What are the changes on any retail or professional investor bailing out an institution ever again by buying these kind of "investments"? The prospectus *cannot* be trusted under any circumstances.

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Frank 1

Mar 15, 2018 at 11:06

Agree gadgetmind2, I will never support bailing out a financial institution again. Personally think the ECN robbery was as bad as this pref robbery attempt. Holders swapped to ECNs to do llyods a big favour at the time of near bankcrupcy and got shafted for it. As most of the ECNs were dated the liability was limited for Llyods. Everytime I see the llyods advert , it reminds me theres no honour amongst thieves

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Frank 1

Mar 15, 2018 at 11:12

Meant legalised robbery above, albeit that different judges made different verdicts

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Mar 15, 2018 at 11:12

There is every chance this move by Aviva can be quashed due to the negative impact on its reputation such an underhand use of a legal loophole potentially created by the Companies Act 2006 to undermine the protection to preference share holders provided by the prospectus of the Preference shares requiring a vote of just preference share holder for any change in terms and conditions. (Articles 641 and 283)

This could be stamped out under article 657 which gives the secretary of state powers to change provisions in Chapter 10 to clarify that at an EGM, impacted an individual share class, a majority of any share classes affected by a reduction of capital in line with the prospectuses of the preference shares. You would think such a move would appeal to politicians. The ability to help ten of thousands of voters in a key support group for the Conservatives at no cost to the public purse and to be seen to be standing up for small retail investors against poor and arguably unethical behaviour by a large financial institution. And if the Conservatives don't act a easy way for the opposition parties to condemn the government for not acting in the interests of ordinary people but siding with big business.

This should become a political issue not just a regulatory and legal one.

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Mar 15, 2018 at 16:09

If it is indeed quashed or they change their minds what can we do to get recompense for the fall in value of these and other preference shares? Nothing, I suspect.

A bit like the recent shorting attacks on IQE, it seems there is no recourse against these people, and the public small share, pref and bond holder just gets shafted.

I was interested to see that the FCA has a consultation paper out on building an excellent financial services industry! I am sure any effort to get involved in that will be a waste of time too, and I have in fact made that my feedback!

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Mar 15, 2018 at 16:11

gadgetmind2, I entirely agree that it is a waste of time expecting Lloyds to do anything honest and it is probably a waste of time to write to them but bearing in mind the news flow on this issue at the moment it surely can’t do any harm just to remind them of their obligations and maybe even seek a definitive statement. I have not written yet, but will do so probably tomorrow

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andrew moffat

Mar 15, 2018 at 18:40

Anit-Spiv, could you kindly explain how the Companies Act undermines preference shareholders?

Meanwhile, TwentyFour Asset Management's Gary Kirk has warned the insurer it will face higher debt costs in future if it cancels high-yielding preference shares.

I am very surprised that the ethics Committee of the Stock Exchange has not taken this matter up. Clearly, it undermines the principles involved in holding 'equity'.

I wonder if the City press will take up the matter. They should and Aviva deserves to be hammered hard in the public domain.

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Mar 15, 2018 at 19:35

The FCA have said they are investigating and have been in contact with Aviva

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andrew moffat

Mar 15, 2018 at 20:21

Thanks TonyN. The more dust everyone can kick up, the better. It is remarkable that an organisation should seek to attract savings from the public whilst simultaneously betraying its own shareholders, some of whom are pensioners. Potentially, Aviva could lose a vast amount of goodwill over this and funds - if the press and others can be mobilised.

As TwentyFour Asset Management's Gary Kirk has reflected, the corporate governance at Aviva is lacking. The Non Executive Directors should be stimulated into action.

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Mar 16, 2018 at 13:20

There is a measure which allows the cancellation of capital to be voted at EGM which would allow the vote of all shareholders not just preference share holders.

A botched piece of legislation creating an unforeseen and unintentional loophole that could and should be closed by the Secretary of State who has the powers under article 657 to amend it so that a cancellation of shares would require the support of all shareholders from that class.

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Norman E

Mar 16, 2018 at 15:35

Am I right in thinking that the Secretary of State in question is Greg Clark, MP for Tunbridge Wells? If so writing direct to him might be appropriate.

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Norman E

Mar 16, 2018 at 15:38

I forgot to say that I am in the neighbouring constituency, but Given the wealthy place Tunbridge Wells is, I am pretty sure a few of his own constituents are holders of these shares. We just need to find them and get them on his case.

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Mar 16, 2018 at 15:39

I would encourage them to do so.

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paul crocker

Mar 16, 2018 at 15:51

YES agree we must do all we can is there any one tech savy that can send

all comments here & some other boards straight to Mark Wilson email & the

Senior non exce.MP,S & others thanks

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paul crocker

Mar 16, 2018 at 15:53

sorry forgot FCA & FOS

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Mar 16, 2018 at 17:05

This is a sure sign that interest rates are staying low, if there was any hope of a decent rise then the share price would have dropped without interference from Aviva.

They cannot redeem the shares to cancel them but they can just cancel them? It seems they need a smart lawyer to pull that one, and a lot of free lunches. It might be interesting to know who sold prior to this announcement.

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Peter Clery

Mar 19, 2018 at 11:59

Write to all the Neds. I have. They could outvote the execs. and certainly should. I have done this via the Chairman's Office. I hope they have the honesty to forward the letters.

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Colin Boylett

Mar 19, 2018 at 12:09

I am a retired IFA and holder of a substantial investment in the various Aviva/GA Prefs.

Aviva's possible redemption is disgraceful, notwithstandfing their interpretation of 'small print'. Many investors will have these Prefs, in a pension portfolio as an alternative to an annuity. The word 'irredeemable' will have been critical to any investment decision. The FCA have been criticised for their refusal to get involved in a similar situation with Lloyds Bank prefs. They will not be able to stand idly by in this instance. Lloyds were a bank. Aviva, the former Norwich Union, have a reputation in the investment industry that goes back centuries. They were a trusted brand. They will not be if this redemption/confiscation goes through. There will be a new investment brand 'AVIVACRAP' which I shall do my utmost to publicise.

It was open to Aviva to communicate with shareholders. They actually hold some of these shares themselves. What they could have done is written annually to Pref. holders reminding them of what they claim is the situation. Had they done this, it is unlikely that a premium would have arisen as the market would have factored in the stated redemption position. The fact that the market did not, indicates that nearly all investors, including professionals believed 'irredeemable' to mean just that. I have some professional knowledge and have held my Prefs. for years. At no time have I been aware that they could be 'redeemed'. For Aviva to claim that 'cancellation at par' is not 'redemption' is fundamentally dishonest and disingenuous. If they proceed many will consider that they cannot be trusted to abide by the terms of any insurance or investment contract. 'Insure your car with AVIVACRAP. If you have an accident, we will pay out on the assumption that your car was a moped'. 'Want to invest, then do not go to AVIVACRAP because you will get paid in Bitcoin'. I could go on. Let's all agreet hat this is the sort of behaviour one would expect from a bunch of spivs, not a well-respected (hitherto) investment house.

It was also open to Aviva to add the word 'cancellable' to the price listings. Why did they not do this. The fact is that many holders of these Prefs. did not buy them at issuance when there was a prospectus available. I believe that subsequent buyers were entitled to rely upon the information that Aviva allowed to be published. At no time have I seen anything to underpin their contention that 'irredeemable' does not mean that.

I urge everybody to get on Twitter or other social media. I can be found there at Baggiesman@sybilsdad

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