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Stephen Fryett, director of CIC Greece and CIC Costa Rica, which purported to carry out business from an office in Amman in Jordan, was banned due to the fact he was not authorised to carry out business in the UK.

The FSA also found neither company was registered in Jordan or Greece, which Mr Fryett claimed.

Despite knowing this, the regulator discovered he encouraged a number of UK insurance advisers and underwriting agents to issue insurance contracts.

Richard Baines, director of Farnham-based Insureyourshop.com Limited, was one of those UK insurance advisers, which issued about 1800 insurance contracts, including employer's liability insurance, purportedly underwritten by CIC Greece or CIC Costa Rica. 

As a result the customers, including construction firms and fast food outlets such as Chinese, kebab , pizza takeaways, as well as fish and chip shops, were not properly insured and risked substantial loss and even prosecution because they did not have employers' liability insurance, the regulator said.

Margaret Cole, director of enforcement for the FSA, said: "The conduct of Mr Fryett and Mr Baines displayed a serious lack of integrity and honesty and put a large number of UK businesses at serious insurance risk with the potential to also undermine consumers' confidence in the insurance sector generally. 

"Our action sends out a strong message that those who fail to check that firms can operate lawfully in the UK and who encourage firms to conduct financial services without authorisation will be prohibited from working in the UK financial services sector."