The regulator revealed it worked closely with Northumbria Police and the Solicitors Regulation Authority (SRA) in this investigation, which involved a “significant number of individuals” across a range of financial, property and legal businesses in the Newcastle area.

The ban of NHL was the final part of the FSA’s action in relation to NHL and connected individuals.

Earlier this year the FSA fined the firm £170,000 for submitting false information in mortgage applications and for allowing David Purdie to act as its chief executive without FSA approval. However, NHL failed to pay this fine. The regulator also banned the firm’s directors Linda Patterson and Grace Darling Purdie, and fined Mrs Purdie £85,000. Other individuals involved have also been banned – David Purdie, the shadow chief executive officer, and mortgage introducers Michael Foster and Kenneth Robinson.

NHL was used by its principals and by the mortgage introducers knowingly to submit mortgage applications to a lender which contained false information. This resulted in the lender unsuspectingly advancing sums which, in some cases, were considerably higher than the purchase price of the property.

Margaret Cole, director of enforcement at the FSA, said the failures at NHL were serious, deliberate and occurred as a matter of routine.

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She explained: “Its principals acted in a totally unacceptable fashion and their actions and the actions of those connected to the firm posed a serious risk to the lender and to market confidence generally.

Northumbria Police recently arrested Grace Darling Purdie, David Purdie, Linda Patterson and Michael Foster, among others. Its investigation, and that of the SRA, continues.

The FSA’s investigation found that the individuals involved were not fit and proper and should be prohibited from any further involvement in regulated activities or authorised firms.