Two units of insurance group Aviva have been fined almost €2.5m by the Central Bank for a series of failures in their internal control systems.

Aviva Life & Pensions Ireland Limited and Aviva Insurance Europe were each fined €1.225m.

The bank's director of credit institutions and insurance supervision said when firms outsourced investment activity they must ensure they had "adequate investment policies, procedures & quantitative parameters".

Fiona Muldoon added it was "inadequate and unacceptable" for companies to rely on group controls.

The companies had failed to adopt an adequate investment policy in relation to Aviva's stock lending activity and had failed to ensure there was adequate reporting and control systems.

Stock lending is an activity where owners of financial instruments such as shares or bonds charge a fee to lend them to other investors for a specified period of time. It enables firms to manage risk and hedge certain investment positions.

The Central Bank also said Aviva did properly monitor its investment managers' stock lending.

Despite the regulatory breaches neither Aviva nor its policyholders suffered any loss due to the inadequately monitored stock lending.

''The Central Bank has previously stated that where serious breaches of these regulatory requirements occur, regulated entities and their management can expect vigorous investigation and follow-up by the bank,'' Ms Muldoon said.

''Where the actions of a firm undermine the Central Bank’s achievement of its statutory objectives, the firm should expect that enforcement action will follow, especially where the breach falls within our stated enforcement priorities,” she cautioned.