The Knight Williams Investors' Action Group, formed earlier this year by a retired oil consultant, Kenneth Jordan, sent the report to the Treasury last week. The report is based on 120 replies the group has received to a 36-point questionnaire sent to the 165 members of the action group.
The answers showed that the majority of the investors' concerns centred on the use of capital to fund income - many felt it had not been made adequately clear that if they continued to draw income when the stock market was flat, they would be eroding their capital.
The replies, which concerned investments going back seven-and-a-half years, also showed that some Knight Williams clients were worried about the overall security of their investments and were unhappy with their returns. A smaller number of clients cited problems with the accessibility of their money - most Knight Williams clients have instant access, but some have invested in qualifying policies that suffer a penalty on early surrender.
Many of the company's customers are specifically looking for income. Most of them are put into unit trusts managed by Knight Williams itself.
Last week, Knight Williams was the subject of an early day motion in the House of Commons, signed by Sir David Steel and Sir Anthony Grant among others, expressing concern about the number of constituents with complaints against the company. A Knight Williams political adviser, Joe Egerton, has written to the Commons' speaker, Betty Boothroyd, asking her to make Sir Anthony Grant retract his criticisms.
Fimbra, the regulatory body, is investigating the company at the request of the Securities and Investments Board.
John Williams, Knight Williams's managing director, said: 'All clients were made aware of the problems of drawing income over certain periods. The majority of our clients have achieved capital growth.'
On the security of the investments, he said: 'All of our clients' money is invested with reputable companies.'
He said that in some cases the company had paid the surrender penalty where a policy had been cashed in early.