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Stephen Jones, of Jones & Poole Independent Mortgage Specialists, which traded from Edinburgh House in Rhyl, Clwyd, and also from an office in Chester, has been banned and fined £100,000 by the regulator.

The FSA confirmed this was the largest fine to be meted out to an individual mortgage intermediary in a case that was not related to widespread mortgage fraud.

Mr Jones, senior partner of Jones & Poole Independent Mortgage Specialists, exposed in the realm of 1500 customers to the risk of receiving unsuitable advice, according to the regulator.

Junior partner Simon Poole, who ran the partnership's office in Chester, was also fined £7000 for exposing 750 clients to the risk of purchasing unsuitable mortgages.

According to the regulator Mr Jones failed to control his business effectively, make sure his firm met regulatory requirements and he did not treat customers fairly when recommending mortgage contracts.

The FSA also found before a visit from the City watchdog Mr Jones arranged for customers to sign and back date retrospective fact find documents to give the illusion he had created contemporaneous sales records.

Mr Jones also provided a lender with false income information to support his own mortgage application, the FSA revealed.

Describing the partnership as "dysfunctional" the FSA said the Clwyd and Chester offices effectively operated as two separate businesses with the two partners having only limited contact with each other.

Jonathan Phelan, head of retail enforcement of the FSA, said any business partnerships in the financial inustry should be controlled as a single business with clear lines of responsibility and accountability.

He said: "Mr Jones and Mr Poole exposed more than 2000 of the partnership's customers to the risk of receiving unsuitable advice and losing money.

"Mr Jones' fraudulent mortgage application and his dishonesty in attempting to cover up regulatory failings were completely unacceptable warranting a ban and a large financial penalty. Mr Poole's failings were of a lesser order and although they were deserving of a fine he has not been banned."

Colin Parkin, director of Lincoln-based IFA Ample Financial Services, said tougher action was required for advisers that committed fraud.

He said: "The FSA looks at it on a fair basis and if you break the rules you are going to get caught. If he has made a fraudulent statement on his own mortgage he has broken the law."