The Financial Conduct Authority (FCA) has launched an enforcement investigation into Market Financial Solutions (MFS), the mortgage lender that collapsed last month amid fraud allegations. The move follows a worldwide asset-freezing order granted on Wednesday against MFS founder Paresh Raja, covering £1.3bn in assets, after creditors obtained court orders in London and Dubai.
MFS borrowed £1.3bn from various financial institutions, including banks and hedge funds, before lending the money to customers. Creditors allege in court documents that some borrowers were connected to Raja, suggesting a structure designed to extract funds on false pretences. Concerns also include potential 'double pledging', where the same property was used as security for multiple loans.
Affected institutions include Barclays, Jefferies, Santander, and private credit lenders such as Elliott Management, Castlelake, and Apollo's Atlas SP unit. Barclays CEO CS Venkatakrishnan stated that the bank's anticipated losses would be 'materially lower' than the £500m owed to it by MFS.
A spokesperson for Raja declined to comment, but his lawyer previously told the Daily Telegraph: 'Mistakes have been made but there has been no intention to defraud whatsoever and Mr Raja has not been the beneficiary of any shortfall (if any) there may be.'
