PUP leader David Ervine said sanctions were unjust
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David Ervine has met the Northern Ireland Secretary to appeal financial sanctions imposed on his Progressive Unionist Party over UVF activity.
Mr Ervine told Peter Hain his decision was "unjust" and was being taken "on the basis of shoddy intelligence".
Last Wednesday, Mr Hain gave the party seven days to respond to his decision made after the latest report from the Independent Monitoring Commission.
The PUP is linked to the loyalist paramilitary UVF and Red Hand Commando.
Mr Ervine has been given the opportunity to put his concerns in writing but said he had not yet decided if he would do so.
Mr Hain said last week that he intended to withhold the PUP's assembly allowances for another year.
Pressure
His decision came amid pressure from nationalist politicians to declare that the UVF has ended its ceasefire following recent violence by the organisation.
The IMC report, submitted in May, said the UVF and Red Hand Commando remained active, violent and involved in organised crime.
Mr Hain said the report concluded that the PUP had not done as much as it should to exert influence on the groups to end such activities.
"The commission recommended that I should continue the financial measures against the Progressive Unionist Party," he said.
Last week, SDLP assembly member Alban Maginness urged the PUP to sever its ties with the UVF, following the group's bitter feud with the rival Loyalist Volunteer Force.
Two lives have been claimed in the dispute between the loyalist paramilitary groupings.