The Financial Services Authority (FSA) found Barnsley-based Darrell Mark Eaden, who ran mortgage and investment specialist Liberty Financial Consultants, did not exercise "due skill, care and diligence" in managing his business.

The FSA said Mr Eaden did not maintain the right level of understanding about pension transfers, nor did he ensure the pension transfer business complied with regulatory standards.

He was banned from being senior manager by the FSA. Liberty has since gone into liquidation.

Mr Eaden was responsible for staff including a pension transfer specialist, 41 investment advisers and five trainee advisers.

However, an investigation by the FSA found he hired the specialist "without properly testing his competence, knowledge or skills". When questioned about his informal supervision Mr Eaden replied it was because "he (the specialist) was the expert".

The investigation also found poor security at the firm between May 2004 and March 2005, with no procedures in place to check whether files were missing.

The watchdog said he also failed to explain what action had been taken on improving the security of client information.

FSA head of retail enforcement Jonathan Phelan said: "Firms must have in place and operate effective systems to ensure suitable advice is given to customers – this is a key part of treating customers fairly. Mr Eaden was responsible for ensuring that Liberty's pension transfer specialist was effectively monitored, but he fell a long way short of achieving this.

"As a consequence he has been banned from being a senior manager." The FSA said Mr Eaden's actions "exposed customers to the risk of being recommended pension transfers that may not be suitable".

The FSA said as the company is no longer trading, it has written to all of its customers who may have been affected, saying they may wish to seek independent financial advice on whether their pension transfer was appropriate.

It added people who think they have grounds for a complaint should contact the Financial Services Compensation Scheme, which handles redress claims from consumers against firms that are no longer trading.