The FCA has used its suspension powers for the first time to take action against the network of advisers.
Subsidiary firms Financial Limited and Investments Limited have been barred from recruiting new Appointed Representatives and individual advisers.
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The FCA would have imposed a penalty of £12,589,134 on Financial and £621,583 on Investments had it not been for the group's financial status. The ban would have been six months had it not agreed to settle early.
FCA officials said they had "significant concern" about the firms' "inadequate systems and controls relating to the recruitment, training, monitoring and control of its ARs".
The regulator also criticised the firms' compliance and file checking processes, which "did not adequately identify and assess risks".
The FCA said today that the two firms failed to ensure that their ARs and individual advisers were adequately supervised and controlled to minimise the risk of mis-selling and the provision of unsuitable advice to consumers.
The punitive sanction is intended to have a financial impact on the Group, which generates revenue from its ARs by way of fixed fees, the FCA said, while deterring similar network firms from committing similar breaches.
Tracey McDermott, the FCA's director of enforcement and financial crime, said: "The sanction is intended to send a message of deterrence to the rest of the industry, and serve as a reminder that the FCA takes systems and controls failings very seriously and is able to respond with sanctions that target the specific revenue streams of different types of business."
The FCA found that, between 20 August 2008 and 30 April 2013, there were systemic weaknesses in the design and execution of the firms' systems and controls and risk management framework.
The FCA found that the firms' failings were directly attributable to the firms' cultural focus, which viewed the ARs and individual advisers, rather than their customers, as the end consumer.
This culture, it said, created an environment, which "allowed poor standards of business to continue for a significant period of time".
Ms McDermott said: "This is the first time the FCA has used its suspension or restriction powers to punish a firm for serious misconduct.
"In this case, it is a direct intervention by the FCA in the way the firm runs its business.
"The FCA's disciplinary action in this case reinforces the importance of collating quality MI, embedding risk-focused systems and controls and encouraging a consumer-focused culture."
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At its peak, the network was responsible for approximately 400 ARs and 500 individual advisers who gave advice to over 60,000 customers, including in relation to high risk transactions such as UCIS, pension switching and occupational pension transfers.
The group was referred to the FCA's Enforcement Division following a risk assessment in May 2012.
The FCA said Charles Palmer, the group's CEO, was the subject of a previous Final Notice in 2010, relating to earlier failings at Financial and Investments.
FCA officials recognised that the group has a new and more experienced Board in place which has engaged with an external consultant to effect material changes in line with an agreed remedial action plan.
Brian Galvin, chief executive officer of both firms, Financial and Investments, said: "We respect the FCA's findings and regret that we fell short of expectations. We have cooperated fully and have introduced new controls and made significant changes to processes and systems to address the FCA's concerns.
"Our underlying business remains strong and profitable and we will continue to support our members so that they can provide clients with the best possible advice and service.
"We are confident that we now have strong, effective and compliant systems and processes in place - and our ambition is to set industry-leading standards for the supervision of advisers."
He said it has introduced new controls and made significant changes to processes and systems to address concerns and all prospective member firms have become subject to a rigorous application process, which also includes a three day induction course and training prior to approval with the FCA.
He added the file-checking process has been overhauled with all member firms having to apply for licences to submit business on a post-sale basis among other measures.