Aviva PLC (LON:AV.) plans to shell out up to £14mln to compensate investors who lost money after the insurer announced plans to cancel high-yielding preference shares.
The preference shares slumped after the company announced that it might cancel them, leading to losses for around 2,000 people who sold these shares.
However, last month Aviva abandoned plans to cancel the preference shares after receiving opposition from MPs, investors and pensioners.
READ: Aviva abandons plans to cancel preference shares after opposition from investors, FCA scrutiny
As compensation, Aviva said on Monday it would offer a “discretionary goodwill payment” to those who sold the shares between March 8 and 22.
Eligible shareholders will have up to six months to make a claim.
"We recognise that whilst we were considering our options for the preference shares this caused uncertainty and led some investors to sell their shares," said chief executive Mark Wilson.
"We hope this goodwill payment goes some way to restoring trust in Aviva."
FCA steps in amid scrutiny
The proposed scrapping of the shares had drawn criticism from investors because they believed they had bought them as irredeemable.
The dispute prompted Financial Conduct Authority boss Andrew Bailey to write a letter to chief executives saying companies issuing preference shares need to ensure the terms and conditions are made clear.
Aviva has appointed accountant KPMG to manage the compensation claims.
"Preference shares remain an industry-wide issue and it is clear now that the best way forward is to seek a regulatory solution before the 2026 deadline when the shares no longer count as regulatory capital under Solvency II," Wilson said.