Former Slaughter and May partner and incoming Financial Conduct Authority (FCA) chairman Charles Randell has admitted that he made an "error of judgement" in relation to investments made into a controversial alleged tax avoidance scheme.

Appearing before MPs on the Treasury Select Committee, Randell acknowledged placing money into the Ingenious Film Partners 2 investment scheme, which has faced a series of challenges from HM Revenue & Customs (HMRC).

Randell told the committee that he "asked some questions about it [the investment scheme], but probably not the right questions", adding: "I need to be careful here because anything I say may sound like an excuse, whereas, you know, I take responsibility for the decision that I took."

He stressed that until he was contacted by HMRC, he thought that the tax regulator considered the scheme "a conservatively structured partnership that they thought was within the spirit of their tax legislation".

Randell flagged the investment to both the FCA interview panel and also in a letter to Treasury Permanent Secretary Tom Scholar, in which he expressed regret at "failing to independently investigate" the assurances given by his financial adviser and the managers of the investment partnership that HMRC was "content with the partnership arrangements".

After HMRC ruled that it was an illegitimate investment vehicle, Randell "dispensed" of his financial adviser, contacted HMRC personally and repaid £114,000 plus interest in owed tax.

Randell, who will take over as chairman of the FCA on 1 April, spent more than 30 years at Slaughters, joining the firm in 1980 and making partner in 1989. He specialised in corporate finance, and worked on financial stability and bank restructuring assignments.

During his time at the magic circle firm he advised the Treasury on a range of matters arising from the credit crunch, including the collapse of Northern Rock and Bradford & Bingley, as well as the Icelandic banks crisis.