FCA apologizes to Scottish boat insurer Stuart Forsyth after tax dispute

Two years ago, the remote Scottish fishing village of Buckie was shaken by a scandal when it became the center of an alleged tax ploy.

Stuart Forsyth, a well-known member of the community who ran a boat insurance, was charged by the City of London’s two main watchdogs of having given his wife around £ 200,000 of his salary to lower his tax bill.

The Bank of England’s Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) fined him £ 154,498 and banned him from working in the regulated sector.

But they apologized yesterday after a higher court ruling found the allegations “totally unfounded”.

The alleged wrongdoing relates to Forsyth’s time as executive director of the Scottish Boatowners Mutual Insurance Association, which was founded by fishermen in 1918 and specialized in the insurance of fishing boats.

After 15 years in the business, he joined the major insurer RSA in 2016 but lost his job due to the fines imposed on him by the FCA and PRA.

Forsyth, 51, said, “Prior to this case, I had a flawless 30 year career in the marine insurance industry. In all the years that I have been subject to regulatory scrutiny, I have consistently pleaded my innocence for the grave allegations that have been made against me.

“I’m relieved that the tribunal’s expertise and experience actually determined that I wasn’t doing anything wrong.

“My wife and I had one hell of a experience which I believe was due to the regulatory authorities’ flawed judgment.”

When they fined Forsyth in 2019, the FCA and PRA described his case as “very unusual”.

Because Buckie was so remote and the company so small, Forsyth brought in his wife, Penelope, to offer hospitality to fishing customers and visiting insurance professionals.

She also helped her husband with secretarial duties and took calls when he was out of the office. Between 2003 and 2010, Forsyth paid Penelope between £ 5,000 and £ 10,000 of his wages for the work – a sum the FCA and PRA described as “not obviously unreasonable”.

But as of 2010, Forsyth, who received between £ 125,000 and £ 180,000 a year, “began transferring excessive amounts of his own compensation to his wife to reduce his own tax liability and took steps to hide it,” regulators said.

Between 2010 and 2016, he reportedly transferred around £ 200,000 in wages and bonuses and managed to avoid paying £ 18,000 in income tax.

Hellish experience: Stuart Forsyth (pictured with his wife Penelope) was also accused of taking incorrect minutes of meetings

Forsyth was also accused of creating fake meeting minutes that created the impression that his company’s compensation committee approved the payments to his wife and sent them to the PRA.

But the Tribunal said: “We have found that Mr. Forsyth is an honest and credible witness in all matters at issue.”

It added that Ms. Forsyth was an “impressive witness” and the tribunal, which included a judge and two independent experts, praised her “full commitment to assisting her husband in the difficult situation”.

The tribunal said the guard dogs had not produced enough evidence to back up their allegations and rejected claims that Forsyth would have been able to reduce his workload if he had hired consultants to help with regulatory changes.

And regulators’ failure to comply with certain disclosure requirements “can only be viewed as the most serious oversight failure,” the tribunal said.

The FCA said it would carefully review the tribunal’s recommendations, admitting errors that led to the late disclosure of documents. A spokesman added: “The FCA has apologized to Mr. Forsyth and the Tribunal for these mistakes.”

The PRA said it “accepts the findings that it has taken a flawed approach to identifying material in this case. “These errors resulted in the belated disclosure of certain materials, for which we apologized to both Mr. Forsyth and the court.”