The incoming chair of the FCA, former lawyer Charles Randell, has revealed to MPs he invested in a film partnership scheme that has been at the centre of a battle with HM Revenue & Customs.
The news represents a fresh blow to the regulator, which has been facing questions over its refusal to publish a report that condemned the treatment of thousands of small-business customers by the Royal Bank of Scotland’s Global Restructuring Group after the financial crisis.
Randell, who appeared before MPs on the influential Treasury committee this week, was grilled over what he called an “error of judgement” that saw him embroiled in an Ingenious scheme promoted by his financial adviser in 2006.
The Ingenious scheme was at the centre of a long battle with HM Revenue & Customs over hundreds of millions of pounds in tax and interest charges. In 2016, the tax tribunal decided that Randell could claim for tax relief at a much lower rates than those the scheme promoted.
Randell said: “It’s clear to me now that far from taking any comfort from that [assurance], I should have seen it as a warning signal.”
Randell disclosed his involvement in the scheme before he was appointed at the FCA, the FT reports. He repaid HMRC £114,000 plus interest, stopped his investment and ceased using his financial adviser.
In a letter dated 19 February and addressed to the chair of the select committee Nicky Morgan, the Treasury’s permanent secretary Tom Scholar said Randell disclosed his investment into the scheme at his interview for the FCA role.
In the letter, Scholar confirmed that the assessment panel for the position at the regulator “was content that Mr Randell had taken appropriate action, and concluded that this should not prevent him from being appointed to the roles”.
At the committee hearing, Randell signalled his intention to address the watchdog’s communication strategy, saying investigating matters such as the FCA’s work on the RBS scandal would be his “first priority”.
Randell said the relationship between the regulator and the Treasury had traditionally been “difficult but successful” and confirmed his intention to conduct a personal assessment into the background behind the strain between public expectations, the Treasury committee, and what the FCA felt itself able to offer.
He said: “The first side of it is how well the FCA communicates and what it can and cannot do and the timetables for doing what it does. We need to look at some of these situations that have caused the tensions. I hope my role as the chair of the FCA is not to come here and defend the FCA, but to hold account of what the FCA does.”
Randell, who is currently an external member of the Prudential Regulation Committee of the Bank of England, as well as a non-executive director of the Department for Business, Energy and Industrial Strategy will succeed John Griffith-Jones as FCA chairman on 1 April.