The Financial Services Authority (FSA) has banned 107 rogue financial advisors from practising, which has risen by 50% in the past year with firms that sold mortgages, pensions, investments and insurance facing inquiry.

Neil Blundell, head of financial crime at Eversheds, said: “These firms have been left exposed as customers have either defaulted on loans or lost their savings as investments have collapsed in value. In this climate, complaints to the FSA will increase. This has also occurred at a time when the rhetoric from the FSA is being ramped up and the FSA is keen to show it is a regulator with teeth.

“Clearly, there are lessons to be learned from this showdown. For example, how was it possible for firms to use fraudulent information to secure loans and mortgages for customers? In one case, the mortgage advisor actually used their own bank details on the application forms. Some firms were using false information on virtually every application. This fraudulent activity only came to light as people defaulted on their loans and mortgages. Thus, it was only the economic downturn that led to the discovery of these practices. As a result of these practices, the FSA will be looking to be far more vigilant and will look to man many more firms from practicing in the months ahead. Whether this leads to more regulation remains to be seen.”