The Financial Services Authority (FSA) has fined investment firm Accendo Markets £56,000 after it failed to ensure its customers were suitable for high-risk products.
The regulator said Accendo failed to have adequate risk management systems in place while it provided advice to customers in contracts for differences (CFDs).
The FSA said the firm had failed to gather adequate client information before providing advice, and had failed to keep records of customers' trading strategies. It also failed to have a robust compliance monitoring programme in place.
The FSA added Accendo had failed to take reasonable care to organise its affairs responsibly, after it used brokers who did not hold the qualification prescribed by the FSA and failed to distinguish between execution-only and advisory trades.
The way Accendo operated meant clients were exposed to too high a level of risk, the FSA said.
Tom Spender, part of the FSA's enforcement division, said: "The FSA regards breaches of its compliance requirements extremely seriously. Customers rightly expect the advice they are given to be based on a robust and properly recorded examination of client suitability - particularly in the case of high-risk products such as contracts for differences."
Accendo's compliance Officer and director Gregory White has also been fined £10,000 as part of the punishment.
Both Accendo and White agreed to settle at an early stage and thus qualify for a 20% discount under the FSA's settlement procedures.
Lack of innovation for solutions
Some 2,000 consumers affected
Achievements, charity work and other happy snippets
Appetite has suffered since Brexit vote
Three key concerns