The FCA said Andrew Rees and Timothy Hughes, partners at 1 Stop Financial Services, have been banned from “performing any significant influence function in relation to any regulated activity”.
They will pay £490,100 to the Financial Services Compensation Scheme (FSCS), which is currently assessing whether the money can be used to compensate victims.
Between October 2010 and November 2012 the pair used their company to advise the customers to switch £112m worth of pensions into self-invested personal pensions (SIPPs).
Through the SIPPS customers were encouraged to invest in unregulated high risk products such as diamonds and overseas property, which would not have been permitted by their previous schemes.
Pembrokeshire-based 1 Stop Financial Services has closed to new business and applied to cancel its FCA permissions.
The regulatory body found that the pair failed to take reasonable steps to ensure their business complied with regulation, a requirement for a significant influence function.
It also said the partners failed to disclose that they were directors and shareholders at EGI, a firm that referred almost a quarter of 1 Stop’s SIPP customers. This conflict meant Rees and Hughes received a fee for the advice given by 1 Stop as well as for the commission received by EGI.
Hughes also failed his duty to ensure that 1 Stop was compliant with the FCA by delegating this responsibility to an external consultant.
Rees and Hughes will write to all those affected to inform them of the ban and the possibility of financial redress.
'Unregulated'
Tracey McDermott, director of enforcement and financial crime at the FCA, said: “By enabling customers to invest in unregulated and often high risk products without assessing suitability, these men exposed customers to the risk of losing their hard earned pension funds.
“This was then compounded by the partners’ failure to ensure that their customers fully understood these risks.”
In March, the FSCS said it was “continuing to investigate” claims against UK advisory firm TailorMade Independent to determine its involvement in advising clients to transfer their existing pensions into SIPPS.
The body said it was trying to determine whether it was able to pay compensation to TailorMade clients who had lost money in such schemes as Green Oil Plantations and Harlequin Hotels and Resorts.
Harlequin went into administration last April, in the wake of problems that began in January 2013, after the UK's Financial Services Authority issued an alert warning about the high number of investors, particularly those using SIPPS, invested in a Harlequin property fund.
It has been fighting a costly court case with investors who believe they are owed money they invested in its Buccament Bay Resort in Barbados, and it has also been the subject of a Serious Fraud Office investigation.
