FCA Fines Aviva Investors GBP17.61 Million for Systems, Control Failings

  By Ian Walker 
 

LONDON--The U.K. Financial Conduct Authority said Tuesday it has fined Aviva Investors Global Services Ltd. 17.61 million pounds ($26.87 million) for systems and control failings, leading to a failure to manage conflicts of interest fairly.

Between Aug. 20, 2005 and June 30, 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.

In May 2013, Aviva Investors found evidence suggesting that two former fixed-income traders had been delaying the booking of, and improperly allocating, trades. Aviva Investors sought to ensure that none of the funds it managed were adversely impacted by this conduct and paid GBP132 million compensation to eight impacted funds, the FCA said.

Since discovering the failings, Aviva Investors and its senior management have worked with the FCA and have committed significant resources to investigating and addressing the weaknesses in its control environment, making significant improvements, which include enhancing governance, strengthening its control framework and seeking to embed an appropriate culture under the leadership of a new management team.

Given this co-operation, and because it agreed to settle early, Aviva Investors received a 30% discount to the fine, the FCA said.

"While Aviva Investors' failings were serious, the FCA has recognised that its 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." Georgina Philippou, acting director of enforcement and market oversight at the FCA, said.

-Write to Ian Walker at [e-mail]; @IanWalk40289749

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