Britain’s financial regulator has opened an investigation into collapsed mortgage lender Market Financial Solutions, marking the first formal regulatory probe into the Mayfair-based group after its failure amid fraud allegations, the Financial Times reported. 

The Financial Conduct Authority (FCA) confirmed the investigation in a brief statement on Friday. The probe follows the insolvency of MFS and several related companies owned by founder Paresh Raja, a collapse that threatens heavy losses for creditors that lent the group more than £2 billion, the FT reported.

Raja, who is in Dubai, has been served with a worldwide freezing order and is barred from spending more than £5,000 a week without the consent of the group’s administrators, the FT reported. The newspaper also said he is subject to a travel ban preventing him from leaving Dubai, citing two people familiar with the situation.

The FCA stated that MFS was “solely registered with and supervised by us” for compliance with the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017, adding that Annex 1 firms are not authorized or subject to wider FCA regulation.

The newspaper said the Bank of England has also been questioning regulated lenders under its supervision that extended credit to MFS. Supervisors are concerned banks may have fallen short in risk assessment and due diligence checks on MFS and affiliated companies, which the FT said have been linked to a property scandal involving a Bangladeshi politician.

Read more at the Financial Times