M&E was also ordered to pay a further pounds 25,000 in costs. The fine, first revealed in The Independent last month, is the largest to be imposed so far, although a larger one against DBS, another network, is expected to be announced soon.
The PIA said the fine was imposed after a visit by its monitoring team to the firm's Leeds office last year showed M&E had delayed contacting clients who were potentially mis-sold a pension. This, the regulator said, was a "serious failure".
Barry Kayes, chairman of M&E Network, which represents 646 advisers working for some 325 firms throughout the UK, said he was "disappointed" at the scale of the penalty.
It had been imposed not because of any serious mis-selling by his group's members but through the refusal of the company's indemnity insurers to permit letters to be sent to those eligible for a review.
The firm had identified 368 mis-selling review cases and completed assessments on 309, of which only two required compensation.
M&E's penalty follows a crackdown by regulators and the Government on firms involved in the mis-selling scandal.