The UK regulator, the Financial Services Authority, has fined Peterborough-based firm Rockingham Independent £35,000 (about $55,000) and imposed partial prohibitions on its directors Stephen Hunt and Jonathan Edwards, and advisor Gary Forster.

The FSA found failures at the firm resulting in 426 customers near or at retirement age being potentially exposed to the risk of receiving unsuitable investment advice.

In particular, the investigation found that 39 investors were advised to invest in unregulated collective investment schemes, after the firm failed to understand the regulatory restriction on the promotion of these investments.

Although UCIS are not authorised schemes there are regulations surrounding them, so those carrying on regulated activities in relation to them, such as giving personal recommendations, are subject to FSA regulation. UCIS cannot be promoted to the general public in the UK and should only be proposed to certain limited categories of investors such as sophisticated investors and high net worth individuals.

Hunt and Forster have been banned from holding the significant influence functions and the controlled customer function relating to any regulated activity promoting or recommending UCIS.  Edwards has been banned from performing compliance oversight in any regulated firm and from performing the customer function relating to any regulated activity promoting or recommending UCIS.

Rockingham has stopped selling any UCIS or structured products and will conduct a past business review to determine whether any of the sales were not suitable and whether any customer redress may be required.

“We have previously warned about the particular risks of UCIS and life settlement products which are likely to be unsuitable for the vast majority of investors.  The industry must heed these warnings,” the FSA said in a statement.