LONDON, March 20 (Reuters) - Britain's financial regulator said on Friday it had launched an enforcement investigation into mortgage lender Market Financial Solutions, which collapsed in February
UK Regulator Probes MFS Collapse, Raising Concerns Over Banking Risks
Regulatory Investigation and Impact on Financial Sector
Background of MFS and Its Collapse
LONDON, March 20 (Reuters) - Britain's financial regulator said on Friday it had launched an enforcement investigation into mortgage lender Market Financial Solutions, which collapsed in February leaving creditors including major banks and private credit funds facing a shortfall in excess of 1.3 billion pounds ($1.74 billion).
Regulatory Oversight and Compliance Issues
The Financial Conduct Authority said in a statement that London-based MFS was only registered with it and supervised for compliance with money laundering, terrorist financing and transfer of funds regulations, and not for wider financial regulation.
Allegations and Administration
London-based MFS, a little-known lender that specialised in complex property-related loans, was placed into administration at the end of February, following allegations of financial irregularities and mismanagement.
Broader Concerns Over Lending Practices
Exposure of Major Lenders
The collapse revived concerns over banks' and private credit funds' lending practices as investors grow jittery about risks in wider credit markets. Barclays Santander Jefferies, Elliott Management and Apollo-affiliated Atlas SP Partners are among the lenders with exposure to MFS, sources have previously said.
Bank of England's Response
Due Diligence and Information Requests
Officials at the Bank of England's prudential arm have requested information from lenders about funds they extended to MFS, and are concerned banks may not have carried out sufficient due diligence, a Financial Times report from earlier in March said.
Administrator and Ongoing Investigation
AlixPartners, the administrators for MFS, said they were aware of the investigation and declined to comment further.
Additional Information
($1 = 0.7466 pounds)
(Reporting by Phoebe Seers; Editing by Tommy Reggiori Wilkes)
