The FCA and PRA have each decided to ban and fine Stuart Malcolm Forsyth, the former CEO of a small mutual insurer, £78,318 and £76,180 respectively.

Following a joint investigation, both regulators’ decision-making committees found that between February 2010 and July 2016, Forsyth transferred excessive amounts of his own remuneration to his wife to reduce his own tax liability, and had taken steps to conceal that arrangement.

As CEO of Scottish Boatowners Mutual Insurance Association (SBMIA), 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.

Up until 2010, Forsyth’s wife was paid between £5,000 and approximately £10,000 per annum, which the FCA suggested was ‘not obviously unreasonable for the work she was undertaking’.

After 2010, Forsyth transferred increasing amounts of his salary, and in most years all or part of his bonus, to his wife – in order to reduce his tax liability. Between 2010 and 2016, Forsyth transferred just over £200,000 of his pay, and by the 2015/16 tax year, his wife’s remuneration was just over £52,000 – more than any other SBMIA employee excluding Forsyth himself.

As a result of these arrangements, the former CEO paid approximately £18,000 less in income tax than he should have done.

SBMIA’s Board and Remuneration Committee were aware that Forsyth had paid a proportion of his salary to his wife, but unaware of the amount she was paid.

The investigation also found that Forsyth had concealed the level of payments from SBMIA’s Board, which included the creation of false minutes for the SBMIA’s Remuneration Committee, involving himself in a subsequent investigation as an external auditor, and ‘responding recklessly’ to an information request from the PRA, the FCA said.

The regulator also said that Forsyth ‘did not believe that his actions were permissible,’ and by deliberately arranging these payments to his wife, Forsyth had ‘acted without integrity to his financial benefit.’

Forsyth has referred the case to the Upper Tribunal where the parties will present their respective cases. The FCA and PRA findings are therefore provisional – reflecting the findings of both regulators as to what occurred – and how they consider Forsyth’s behaviour should be characterised.

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