A FORMER insurance company boss who transferred “excessive amounts” of his salary to his wife to reduce his tax and tried to conceal the arrangement has been fined more than £154,000 by regulators.
The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) said Stuart Malcolm Forsyth, ex-CEO of the Buckie-based Scottish Boatowners Mutual Insurance Association (SBMIA) transferred more than £200,000 of his pay to his wife between 2010 and 2016 and, as a result, paid £18,000 less in income tax than he should have.
He was fined a total of £154,498 – £78,318 by the FCA and £76,180 by the PRA and banned for “lacking integrity”.
As CEO, the regulators said Forsyth paid his wife a proportion of his own salary in compensation for providing some out of hours administrative support and occasional hospitality at home.
Until 2010, she was paid between £5000 and £10000 per annum, which “not obviously unreasonable” for the work she was undertaking.
However, by the 2015/16 tax year, his wife’s remuneration was just over £52,000, more than any other SBMIA employee except her husband.
The FCA said: “SBMIA’s Board and Remuneration Committee were aware that Mr Forsyth paid a proportion of his salary to Mrs Forsyth but were not aware how much Mrs Forsyth was paid.
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“Mr Forsyth concealed the level of payments from SBMIA’s Board and others. In particular: Mr Forsyth created false minutes to give the misleading impression that SBMIA’s Remuneration Committee had agreed the salaries of both Mr and Mrs Forsyth in 2013, 2014 and 2015.
“In fact, it had only agreed Mr Forsyth’s salary. In late 2015, after internal concerns were raised about Mrs Forsyth’s remuneration, Mr Forsyth inappropriately involved himself in a subsequent investigation by an external auditor.
“In 2016, Mr Forsyth responded recklessly to an information request from the PRA by sending it the false Remuneration Committee minutes.”
It said Forsyth did not believe his actions were permissible, and added: “He was aware that Mrs Forsyth only carried out a limited amount of administrative work and that the amount of her remuneration for that work was unjustified. By deliberately arranging these payments to Mrs Forsyth, Mr Forsyth acted without integrity to his financial benefit.”
The FCA said its Decision Notice findings had been classed as “provisional” as Forsyth had referred them to the Upper Tribunal, a form of appeal where both sides will put their cases.
SBMIA stopped trading in March and transferred its business to TT Club Mutual Insurance Ltd (TTI) in London.
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