The Financial Services Authority (FSA) has publicly censured Integrity Financial Solutions, but it has had to waive the £350,000 fine it would have imposed because the firm is in liquidation.
It said in its final notice of the decision that Integrity recieved 133 complaints about its geared traded endowment policies (GTEP) up to the end of 2008, and that 47 claims against Integrity had been lodged with the Financial Services Compensation Scheme (FSCS), although not all of these may relate to GTEPs.
The regulator said Integrity - formerly headed up by Iain Stamp - had failed in its role as a product provider and adviser of geared traded endowment policies (GTEPs).
With the firm already in voluntary liquidation, the regulator has instructed the liquidator to write to the GTEP customers of the firm’s IFA practice informing them they may have received unsuitable advice and could be entitled to make a claim.
The FSA waived the £350,000 fine it would have imposed so that 'any remaining money can be used to meet customer claims.'
Margaret Cole, the FSA's director of enforcement and financial crime, said: 'Geared traded endowment policies are complex products with significant risks attached to them.
'Integrity should have made these risks clear to investors, but it did not; neither did it ensure that the promotional material given to IFAs selling its product described the risks sufficiently.'
It said as a result of this, clients of Integrity - sister company of UK Integrity Group which continues to operate - may have received unsuitable advice to invest in GTEPs.
Cole said: 'As Integrity is in liquidation we have not imposed the £350,000 fine that we would otherwise have recommended as we believe any money left should be used to meet customer claims.'
The FSA added that Integrity had previously rejected the findings of the regulator regarding sales of GTEPs to customers of its own IFA practice, forcing the regulator to carry out its own review of the firm and then take action.