Details of the fine against M&E, which is in the final stages of being formalised, comes days after The Independent revealed that another network, DBS Financial Management, was about to face a record pounds 500,000 penalty.
Simon Hudson, chairman of M&E, yesterday declined to comment on the impending fine against his own network. However, he said: "We have had no problem with training and competence or compliance visits by the PIA.
"Like everyone else, we have been through the mangle from the PIA's pensions review team. We are as vulnerable to that as anyone."
He added that he would be calling for an inquiry by the PIA into how decisions on fines were allegedly being made before the disciplinary bodies that were supposed to agree them had even met.
A PIA spokeswoman refused to comment on any aspect of the regulator's disciplinary strategy.
The latest fine, the second-largest to date, will be the third against networks of independent advisers. A few weeks ago, the PIA fined Berkeley, another firm, pounds 50,000 over the same issue. The fines are certain to raise questions about whether large networks can deliver effective controls on their members.
Networks, which have grown substantially since the PIA was formed in 1994, are supposed to offer the safety of centralised compliance controls in return for some commission income.
Yet last week, DBS Financial Management, chaired by Ken Davy who is also a leading figure within the financial services industry and sits on the PIA board, was revealed to be in the regulator's sights. DBS, which has 1,700 member firms with 2,500 individual advisers, is the largest network of advisers in the UK.
M&E, formed in November 1987, is the second-largest, with about 330 firms employing 650 advisers. Average commission income is pounds 73,000 per member, with the network as a whole taking more than pounds 22.5m in commission income last year. The firm's members have more than 70,000 clients among them.
A recent survey on behalf of Money Marketing, a financial magazine, showed that M&E has the highest proportion of former "tied agents" and the smallest number of IFAs as members.
Tied agents are ex-salespeople who were allowed to sell the products of only a single company. By contrast, IFAs can advise on any product.
Industry observers were surprised yesterday by the looming fine against M&E. Unlike other networks, it does not allow members to place business directly with a product provider.
All proposals have to be referred to the company's head office in Leeds, where they are checked and only then referred to the relevant financial provider. This should ensure far tighter controls over the firm's members, something that M&E had previously claimed as a particular strength.
One member of a rival network, who would not be named, queried whether M&E's controls were as strict at head office level as had been claimed.
But Mr Hudson said: "This would have nothing to do with our compliance systems." More firms were facing problems less with the extent of any pensions mis-selling than with the speed at which it was being cleared up.Reuse content