Remote fishing village at centre of tax storm: Watchdog bans insurance boss for funnelling £200k to his wife
It is about as far removed from the hustle and bustle of the City as you can get.
But the remote fishing town of Buckie on the Moray Firth coast, around 55 miles east of Inverness in the Scottish Highlands, is the unlikely setting for the latest financial scandal.
The two main City watchdogs have decided to fine the former boss of a local insurance firm a total of £154,498 for funnelling around £200,000 in salary and bonuses to his wife to cut his tax bill.
Wrangle: Stuart and Penelope Forsyth and the remote fishing town of Buckie on the Moray Firth coast
The man in question, Stuart Forsyth, is also accused of trying to cover up the tax ruse by creating false minutes of a boardroom meeting. Watchdogs said this bogus document gave the misleading impression that the remuneration committee of the Scottish Boatowners Mutual Insurance Association had approved his wife’s payments.
Forsyth is accused of sending these false minutes to the Bank of England’s Prudential Regulation Authority when it launched an investigation into him in 2016.
In a joint statement, the Financial Conduct Authority and the PRA described the 49-year-old as ‘lacking integrity’ and said it had decided to ban him from taking another job in the financial services industry.
This provisional decision, against which Forsyth is appealing, has created a headache for FTSE 100 insurance giant RSA, which appointed him to head its marine underwriting business in London three years ago.
For 15 years before joining RSA, Forsyth ran the Scottish Boatowners Mutual Insurance Association which was set up by fishermen in 1918 and specialised in insuring fishing boats.
Describing it as a ‘highly unusual’ case, the PRA and the FCA explained that the village of Buckie was so remote that Forsyth had to enlist the help of his wife Penelope to arrange work dinner parties.
They explained that this was necessary because Buckie is a ‘small, geographically remote town’ which had no suitable hotels for visiting brokers and insurance professionals.
According to the regulators, the small number of staff, the lack of middle management and the anti-social hours worked by the firm’s fisherman clients meant there was ‘a genuine need for some form of hospitality to be provided and extra out of hours administrative support’.
This included helping prepare the firm for new financial regulations. Between 2003 and 2010, Forsyth paid his wife between £5,000 and £10,000 of his salary for the work she was carrying out.
The regulators said ‘this was not obviously unreasonable for the work she was undertaking’.
But from 2010, Forsyth – who was paid between £125,000 and £180,000 a year – began to transfer ‘excessive amounts of his own remuneration to his wife to reduce his own tax liability and took steps to conceal that arrangement’. Between 2010 and 2016 – when he was finally caught – he transferred around £200,000 in pay and bonuses and managed to avoid paying £18,000 in income tax.
In the final year before the ruse was uncovered, Mrs Forsyth was paid just over £52,000 – making her the most highly paid employee at the company, apart from her husband.
The FCA and the PRA said: ‘Mr Forysth did not believe his actions permissible. 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.’
An RSA spokesman said the case ‘relates to a period prior to Stuart Forsyth’s employment with RSA’.