UK FCA To Increase Scrutiny Of Unregulated Firms After MFS Collapse

The UK Financial Conduct Authority (FCA) is increasing scrutiny of unregulated financial firms following the collapse of Market Financial Solutions (MFS) in March and allegations of fraud.

The regulator plans to seek information on business models and financial crime risks from around 900 companies registered under the Annex 1 framework. About 1,200 lenders, brokers, leasing firms and safe custody providers fall under the category. These businesses are not subject to the FCA rulebook but must register for anti-money laundering checks. The FCA is concerned that some firms may rely on parent companies or standard procedures that do not address their specific risks. It is also examining lending conducted through complex structures and special purpose vehicles.

MFS’s collapse left creditors facing an alleged 1.3 billion pounds shortfall, with about 250 million pounds reportedly unaccounted for. The FCA said it will use information collected from Annex 1 firms to identify and address financial crime risks.

The regulator also warned that new registration applications may take longer due to increased checks.