The penalty would have been as high as £25,152,900 had the company not agreed to settle at an early stage of the probe.
Officials said the £17,607,000 penalty was for "systems and controls failings that meant it failed to manage conflicts of interest fairly".
According to the FCA "these weaknesses led to compensation of £132,000,000 being paid to ensure that none of the funds Aviva Investors managed was adversely impacted".
Aviva Investors and its senior management have worked with the FCA in an "exceptionally open and cooperative manner" since discovering the failings, the FCA said.

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Bosses have committed "significant resources to investigating and addressing the weaknesses in its control environment, making significant improvements".
Georgina Philippou, acting director of enforcement and market oversight at the FCA, said: "Ensuring that conflicts of interest are properly managed is central to the relationship of trust that must exist between asset managers and their customers.
"It is also a fundamental regulatory requirement. This case serves as an important reminder to firms of the importance of managing conflicts of interest effectively by implementing a robust control environment with effective systems to manage the risks.
"Not doing so risks customers' interests being overlooked in favour of commercial or personal interests."
According to the regulator, from 20 August 2005 to 30 June 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.
The FCA statement read: "A proportion of these performance fees were paid to traders in Aviva Investors Fixed Income area who managed funds on a side-by-side basis.
"This type of incentive structure created conflicts of interest as these traders had an incentive to favour one fund over another. This risk was particularly acute on desks where funds traded in the same instruments.

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"The conflicts of interest and risks inherent in the side-by-side management of funds require robust risk management systems and controls. Aviva Investors identified this and recorded it in its conflict log.
"However the FCA found that there were significant weaknesses in Aviva Investors' risk management framework and the systems and controls that operated in the Fixed Income area.
"While Aviva Investors' policy required trades to be allocated in a timely manner, weaknesses in systems and processes meant traders could delay recording the allocation of executed trades for several hours.
"By delaying the allocation of trades, traders who managed funds on a side-by-side basis could assess a trade's performance during the course of the day and, when it was recorded, allocate trades that benefitted from favourable intraday price movements to one fund and trades that did not to other funds. "This is an abusive practice commonly known as cherry picking."
In May 2013, Aviva Investors found evidence to suggest 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 compensation of £132,000,000 was paid to eight impacted funds.
FCA officials said the firm's "failure to implement robust systems and controls...where there were clear conflicts of interest led to an unacceptable risk that these weaknesses could be exploited for personal gain".
The FCA concluded that Aviva Investors "failed to take reasonable care to organise and control its affairs responsibly and effectively with adequate risk management systems and failed to manage conflicts of interest fairly, both between itself and its customers and between customers and other clients".