A group made up of M&G Prudential, Invesco, GAM, Blackrock, Legal & General and Eden Tree have clashed with Aviva over its plan to cancel £450m of preference shares, many of which are owned by pensioners.

The group met with Aviva chairman Adrian Montague yesterday to demand the insurer backs down on the decision to cancel three issues of preference shares which pay an average of 8.5 per cent annually.

Treasury Committee chair Nicky Morgan has written to FCA chief executive Andrew Bailey seeking information about the FCA's approach to Aviva's cancellation of preference shares.

Morgan wrote: "Is the FCA satisfied that Aviva management's assertion that these shares could be cancelled as per value with the approval of ordinary and preference shareholders voting as a class was communicated in a manner that was consistent with the listing rules, and the disclosure and transparency rules?".

Furthermore she stated: "Is the FCA satisfied that Aviva management's intention to cancel these shares at par value was communicated in a manner that was consistent with the listing rules and the disclosure and transparency rules?

"What options are available to the FCA to address concerns abut the functioning of the wider market for preference shares, including concerns about their redeemability?".

Morgan has requested responses by 30 March.

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