The incoming chairman of the Financial Conduct Authority, who admitted to an “error of judgment” after investing in a controversial tax avoidance scheme, has been given the go-ahead by MPs to take up his new role at the City regulator.
The Treasury committee approved the appointment of Charles Randell, a former City lawyer whose firm reportedly billed the Treasury nearly £33m while acting as an adviser during the financial crisis, after receiving an assurance there were “no other aspects of his personal tax affairs that might cast his judgement into further question”.
On Tuesday, Randell told the select committee that he had failed to see a “warning signal” about Ingenious Film Partners 2 LLP, an investment product that promised members tax reliefs but was subsequently challenged by HM Revenue & Customs.
Ingenious Film Partners 2 was a film production partnership that proved popular with many celebrities and sports stars including Steven Gerrard, Ryan Giggs and David Beckham. It used tax breaks designed to encourage films to be made in the UK. Those who put money into the scheme could claim tax relief against film production losses.
Nicky Morgan, the chair of the Treasury committee, said: “Mr Randell’s membership of Ingenious Film Partners 2 LLP was picked up during the committee’s preparation for Tuesday’s appointment hearing, and further details have been elicited through my correspondence with the Treasury.
“The committee raised this issue during the hearing. Mr Randell acknowledged that he had made an error of judgement by participating in the scheme. We received an assurance from him that there are no other aspects of his personal tax affairs that might cast his judgement into further question.
“As the report states, the committee was satisfied that Mr Randell has the professional competence and personal independence to be chair of the FCA and the PSR [Payments Systems Regulator].”
Morgan had asked Randell on Tuesday if he could see that the Ingenious scheme would look, to the general public, like a “rather clever tax wheeze” to let people pay less tax.
“Yes, I can”, Randell replied.
Randell, who said he had repaid £114,000 plus interest to the taxman, is currently an external member of the prudential regulation committee of the Bank of England and a non-executive board member of the Department for Business, Energy and Industrial Strategy.
He worked at the law firm Slaughter and May from 1980 to 2013, becoming a partner in 1989.
He rose to prominence in the City by advising the Treasury on the collapsed lenders Northern Rock and Bradford & Bingley during the credit crunch, as well as on the government’s investment into Royal Bank of Scotland and the merger of Lloyds and HBOS.
During that time, Slaughter and May was estimated by the National Audit Office to have billed the Treasury £32.9m for its services.