Regulation

Treasury probes new FCA chief's buy-to-let investment during approval process

The Committee asked about the history and purpose of the arrangement and whether this had been driven by tax advantage.

Rozi Jones
|
24th July 2020
FCA new
"Transparency will be critical in our relationship with the chief executive of the Financial Conduct Authority, as we carry out our scrutiny of its work."

The Treasury Committee has today approved Nikhil Rathi as the new chief executive of the FCA.

In its report, the Committee said it is "satisfied that Mr Rathi has the professional competence and personal independence to be appointed" but noted an investigation into his ownership of a buy-to-let property through a limited company.

The Financial Services and Markets Act 2000 states that the chief executive of the FCA's term must not begin until either they have appeared before the Committee, or three months have passed, whichever is earlier.

Nikhil Rathi was most recently the chief executive of the London Stock Exchange. From September 2009 to April 2014, he was director of financial services at HM Treasury, leading the Treasury’s work on the UK’s EU and international financial services interests.

As part of the Committee's report, it investigated a record in Companies House of Rathi having been a person of significant control of VLS Holdings LLP.

Rathi had declared an interest in buy-to-let properties to the panel during the appointment process, but not the detail of his membership of the holding.

Rathi confirmed that as the investment involved a further family member, "a partnership agreement seemed the most appropriate way to own the property".

At Rathi's appointment hearing, the Committee asked about the history and purpose of the arrangement and whether this had been driven by tax advantage.

He told the Committee it had been driven by flexibility of use, namely pooling together of family resources for an investment while retaining flexibility to use it for personal use and confirmed that the partnership was UK resident and filed returns with HMRC.

The FCA had confirmed that there had not been a conflict of interest with the purchase and Rathi said it was a "tax transparent arrangement and all members of the partnership would file personal tax returns in the usual way".

While the Committee approved Rathi, it concluded that "it would have been helpful if Mr Rathi had provided more information upfront to both the recruitment panel and the Committee".

The report concluded: "Transparency will be critical in our relationship with the chief executive of the Financial Conduct Authority, as we carry out our scrutiny of its work."

 

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