UK regulator launches probe into collapsed lender MFS

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).

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.

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.

The collapse revived concerns over banks ' and private credit funds' lending practices as investors grow jittery about risks in wider credit markets. Barclays BARC.L Santander SAN.MC Jefferies JEF.N, Elliott Management and Apollo-affiliated Atlas ​SP Partners are among the lenders with exposure to MFS , sources have previously said.

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.

AlixPartners, the administrators for MFS, said they were aware of the investigation and declined to comment further.

($1 = 0.7466 pounds)