The regulator has frozen the bank accounts of Tunbridge Wells-based firm London Capital & Finance, over concerns that the 14,000 clients of the firm may not have fully understood the nature of the investment they were making due to unclear marketing material.
London Capital & Finance signed clients up to a fixed rate Isa, promising 8 per cent interest, with investor's capital then invested into mini-bonds.
These assets are loans, and not traded on any stock exchange.
The mini-bonds were used to issue loans to small businesses.
Mini-bonds are unregulated investments, so if underlying loans perform sufficiently poorly that London Capital & Finance is not able to make the interest payments to investors clients will not be covered by the Financial Services Compensation Scheme (FSCS).
A statement on the regulator's website said London Capital & Finance must "cease conducting all regulated activity" and not to touch the money in its bank accounts.
The FCA statement added that its work is "ongoing" and declined to offer assurances that investors would get their money back.
The regulators statement added that while mini-bonds are unregulated, and issuers do not need to be regulated, the marketing of such bonds does require authorisation.
London Capital & Finance continues to be on the FCA register and advertises the fact on its website.
The FCA said: "The FCA directed LCF to withdraw all of its existing marketing materials in relation to its fixed rate Isa or bond.
"Following this intervention, the FCA required LCF to cease all regulated activities and not to dispose of any of its assets without prior consent of the FCA.
"The FCA's enforcement division are conducting further investigation. The FCA continues to work with the firm and relevant external stakeholders to take all appropriate steps."
London Capital & Finance, in the disclaimers on its website, stated: "Our products are aimed at retail clients who are UK taxpayers and who fall in the category of either high net worth individual, sophisticated, self-certified sophisticated or restricted investor."
In a statement on its website, London Capital & Finance stated none of the companies it gave money to via mini-bonds have defaulted and all the businesses have provided security for the loans.
London Capital & Finance stated it continues to work with the FCA to find a way forward.