Enforcement inquiry follows insolvency and freezing order against MFS founder
The UK’s financial watchdog has launched an enforcement investigation into Market Financial Solutions (MFS), the Mayfair-based mortgage lender that went into administration last month.
The Financial Conduct Authority (FCA) confirmed on Friday that it had opened a formal probe, but did not set out the scope of its inquiries. The regulator said MFS was “solely registered with and supervised by us for its compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017”. It added: “Annex 1 registered firms are not authorised or subject to wider FCA regulation,” meaning the firm was overseen only for anti-money laundering and related checks, rather than the full UK regulatory rule book.
The move is the first publicly confirmed enforcement investigation by UK regulators into MFS, whose failure has raised concerns about risk controls in private credit markets and the exposure of banks and alternative lenders that provided funding to the group.
Paresh Raja (pictured right), who set up MFS in 2006, is subject to a worldwide freezing order sought by the company’s administrators. The order, made in London and Dubai, requires him to disclose assets above specified thresholds and restricts his spending without the administrators’ approval. Reports have said he is in Dubai, and people familiar with the matter have said a travel ban prevents him leaving the emirate.
Creditors have alleged that collateral was pledged more than once, and have warned of a large shortfall following the collapse. The group’s failure has also prompted scrutiny of the due diligence conducted by regulated lenders that financed MFS and associated companies, including questions raised by the Bank of England, according to reports.
Accounts previously filed by MFS showed a loan book of about £2.4 billion at the end of 2024, alongside substantial reported net assets. Some of the lending was linked to high-value London property, through companies connected to hundreds of homes in districts including Knightsbridge, Belgravia and Mayfair.
Lenders reported to have exposure include banks such as Barclays, Jefferies and Santander, and private credit and hedge fund firms including Elliott Management, Castlelake and Apollo’s Atlas SP unit.
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