The action group was set up by a disgruntled Knight Williams client, Kenneth Jordan, a retired oil consultant. Since he started the group he has received more than 300 calls. The group now has 165 members from Knight Williams' client base of 24,000.
Knight Williams is a national firm specialising in giving advice to the elderly. Many of its clients are put into its own unit trusts.
The action group's complaints have led to the top City watchdog, the Securities and Investments Board, asking the adviser's regulator Fimbra to examine complaints against the company.
Mr Jordan says he wants all investors to be put back in the same position they would be in before they had made an investment, and is also seeking damages.
David Matthews, a retired lecturer at the University of Wales, and his wife Celia, a retired teacher, invested pounds 56,000 in 1989. They were told they could draw an income of pounds 350 a month from the bond and were advised to take out a couple of 10-year 'qualifying' policies which would be funded by annual pounds 1,000 payments from their investment.
After they had made the investment they were told by their adviser that it would not be advisable to draw an income because of prevailing investment conditions. The investment shrank to pounds 42,000 over a three-year period.
Mr Matthews decided to cash pounds 20,000 to put into a Confederation Life bond, which paid an income. He said: 'The way the capital was shrinking was keeping me awake at nights.'
He feels angry that he was unable to draw any income from his bond when, if he had left it on deposit, he would have benefited from the prevailing high interest rates. He said: 'Our expectations for income were not met.'
The total amount that he has still invested with the company, including the money invested in qualifying policies, is pounds 31,000.
Robin Knight Bruce, director of Knight Williams, said that all the documentation made it clear that the income payments depended on investment performance. 'Mr Matthews withdrew pounds 20,000 just as the market started to pick up against the advice of the salesman,' he added.
Another investor who was able to draw some income but is angry at the advice he has been given is a former builder from Bedfordshire, Joe Dowling, aged 61. Knight Williams has offered an ex gratia payment of pounds 10,000 without admitting liability.
Mr Dowling invested a total of pounds 250,000 through Knight Williams six years ago. He said: 'The portfolio was designed to pay an income of about pounds 20,000. Another pounds 20,000 per annum is paid into a qualifying policy.'
After the investment had been set up for about five weeks Knight Williams doubled the annual management charge to 1.5 from 0.75 per cent.
One year into the investment Mr Dowling's adviser suggested cutting down on the income drawn by 15 per cent. The following year he was advised to cut the income further, so in the end he was drawing about pounds 16,000 a year.
Mr Dowling became increasingly unhappy about the way his money was being managed and about the high amount of commission earned on the product by Knight Williams - pounds 38,000 over a five-year period.
He taped all his interviews with his adviser. Earlier this year he met John Williams, managing director of Knight Williams.
In a letter to Mr Dowling, Mr Williams said: 'I accept that you may not have understood the access to capital implications of the qualifying policy despite your adviser having referred to them and the supporting documentation having mentioned them.
'You may also not have fully understood the charges over and above those described . . . although the documentation did so.'
Mr Knight Bruce said the company had a relatively low level of complaints compared with the number of its clients. Knight Williams has recently recruited Fimbra's head of legal services, Colin Pinnell, to oversee its legal and compliance department.
The Knight Williams Action Group is on 0223 871108.