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Peter McGahan, managing director of Truro-based IFA Worldwide Financial Planning, said he was concerned despite the FSA's efforts to crack down on mortgage fraud any adviser that is part of a network could be able to commit the crime repeatedly.

He said as appointed representatives were not individually registered with the City watchdog they could therefore could commit mortgage fraud and then go and work elsewhere.

Mr McGahan said: "As long as the new company does not get a reference from the previous company they are clear to go."

But the FSA said this should not occur so long as networks reported appointed representatives found guilty to have committed mortgage fraud to the police and the City watchdog as the regulator could then issue a banning order for such individuals.

Robin Gordon-Walker, press officer for mortgages and general insurance at the FSA, said networks had a duty to do due diligence on advisers hoping to join and not just when they were out in the field offering advice.

He said: "If a broker or network discovers one of its appointed representatives is indulging in mortgage fraud they should report that to us and the police.

"We can follow their report up because even though the appointed representative was not directly authorised by us they can be prosecuted by the police for mortgage fraud and we can also do a banning order."

When asked what action the FSA would take against networks that allowed someone to join who had a banning order and how it cracked down on networks that failed to report fraudulent mortgage advisers, Mr Gordon-Walker said a single approach was not adopted.

Mr Gordon-Walker said: "It would depend on the circumstances but we can ultimately take supervisory or enforcement action."

But Worldwide Financial Planning's Mr McGahan said the FSA's system relied on networks admitting they had taken on dodgy intermediaries and was flawed.

He said: "This system relies on networks highlighting the fact they have serious issues with the way they do business. If mortgage fraud has taken place it is probably because the network has not done stringent enough checks. Do networks really want to open themselves up to that criticism?

"An appointed representative that only has been suspected of mortgage fraud can move freely. What you need to ensure is each individual is regulated. Then the feeding company has to create a report and we would have a register to show where that person works.

"It is just so easy for these individuals to move around free and easily. You need to be able to track an individual around for their entire working life."