The FCA banned him from performing any significant influence function at any regulated firm and also censured him, describing him as "out of his depth." The regulator says that the disciplinary action followed its thematic review of Sipp operators last year which outlined some of its concerns about the sector.

The watchdog said that Mr Wells' tenure at the firm should be seen as a "how-not-to" guide to running a Sipp operator.

Mr Wells would have been fined £58,500 but for the fact that he was able to show that the penalty would cause serious financial hardship. Following investigation the FCA concluded that Mr Wells did not have an adequate understanding of the Sipp operator's regulated activities and regulatory responsibilities or of his own responsibilities as managing director.

Mr Wells led a rapid expansion of the business, away from standard investments, but had not identified or mitigated the risks involved for the MPAS Sipps and Sipp members as a result of this expansion. By allowing a high proportion of non-standard investments into the MPAS Sipps without the necessary controls or adequate capital resource, he exposed customers and MPAS itself to a significant level of risk. The FCA said that Mr Wells also did not understand, or make reasonable efforts to understand, MPAS' capital and compliance needs, which meant that provisioning for both was lacking.

The FCA also found that Mr Wells' failings meant that MPAS:

· put client money at risk by breaching FCA rules on client assets;

· failed to vet and monitor third parties, for example the IFAs and fund managers with which MPAS dealt; and

· lacked adequate knowledge of the assets it administered for clients.

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Tracey McDermott, director of the enforcement and financial crime division at the FCA, said: "Last October, as the Financial Services Authority, we published the findings of a thematic review on Sipp operators and outlined some of our key concerns in this sector; this case is a graphic illustration of the reasons for these concerns. Mr Wells' tenure as managing director should be seen as a 'how-not-to' guide of running a Sipp operator - he was out of his depth.

"I would recommend that anybody operating, or thinking of operating, a Sipp reads the final notice in detail; it covers almost all aspects of Sipp operation and is a good indicator of the standards we expect. Were it not for his financial circumstances, we would have imposed a significant financial penalty, but even without it, he has paid a heavy price."

In October 2012 the Financial Services Authority published proposals outlining how much capital Sipp administrators must hold in future. The proposed regime reflects the growing popularity of Sipps as a way to invest, says the FCA, the wide range of assets that can be placed within them, and will help protect consumers should the operator have to be wound down.