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The FSA has applied to appeal against a tribunal decision against Leeds-based legal firm Fox Hayes because it felt it profited from authorising misleading promotions.

It is the first time that the regulator has appealed a tribunal decision, but the FSA believes Fox Hayes was too lightly penalised for improper conduct and benefited financially as a result.

The regulator originally concluded the applicant had not taken reasonable steps to ensure the financial promotions were clear, fair and not misleading and recommending imposing a penalty of £150,000.

But this fine was first slashed to £70,000 before being increased to £146,000 as a result of two tribunals on 24 September 2007 and 6 March 2008.

Abi Jones, spokesman for the FSA, said: "After the first tribunal, it was decided to reduce the fine to £70,000. However, it came to light that one of the partners at the firm had received some commission of £410,635.

"We said therefore that it should be taken into account that they received this. It would have been a lot more. We do not think the outcome adequately reflects the misconduct."

During the investigations, the FSA considered the professional behaviour of two partners at Fox Hayes - Robert Manning and Malcolm Jones. It was the work of Mr Manning that came under the closest scrutiny.

The FSA said that Mr Manning made a number of contacts in the US and was given the task of ensuring promotions for overseas companies were fair and not misleading, however, the watchdog found a number of serious lapses in this area.

Those customers felt to be most at risk were those City workers who had received large bonuses and were looking for an alternative option to invest the cash.

Stephen Atkins, adviser on the FSA small business practitioners' panel, said that when new evidence comes to light in this way the FSA takes a number of key areas into consideration before deciding on whether the fine is appropriate.

He said: "The FSA would take into account the level of risk and measure whether the firm stopped the FSA meeting its regulatory objectives, the amount of customer detriment and the firm’s ability to pay.

"If you are going to get fined a fiver for something that you later make £100 out of, you are going to carry on doing it. The fine needs to be proportionate to the firm’s size and the customer detriment."

A representative from Fox Hayes was unavailable for comment at the time of going to press.