The failure of a Mayfair-based mortgage lender is unravelling into a major financial scandal as it emerged that more than £2.5 billion of investor money is at risk and that retail clients may also be exposed to potential losses.
Apollo, one of the biggest investment institutions in the world, was the latest to confirm a potential problem on Friday, revealing that its Atlas arm had £400 million invested in the business, Market Financial Solutions.
TPG, previously known as Texas Pacific Group, later confirmed it had exposure of £44 million. Shares in Barclays, which has already been named as having a purported £600 million exposure, fell by 4.2 per cent on Friday.
• Barclays’ £600m exposure as mortgage firm collapses amid fraud claims
Two institutional creditors, Zircon Bridging and Amber Bridging, have warned there may be a £930 million shortfall on their investment of £1.2 billion as a result of alleged pledging of the same property assets as collateral to obtain multiple loans. Zircon and Amber, which are also insolvent, are parts of the MFS Group which lent funds from institutions.
In court documents, the administrators, from Alix Partners, accused MFS of the double pledging of assets.
But The Times has learned that small investors could also be facing significant losses. MFS told private investors they could make returns from “high-earning bridging finance and buy-to-let mortgages”. One source claimed retail investors have “life savings” at risk. It is not yet clear which MFS entity retail investors are exposed to.
Sources said the complex collapse was connected with a major corruption scandal in Bangladesh. The former land minister there, Saifuzzaman Chowdhury, is alleged to have used MFS in hundreds of property transactions, which are now the subject of a freezing order by the National Crime Agency.
JOHN NGUYEN FOR THE TIMES
The fresh revelations came as the newly appointed administrators from Alix Partners began sifting through documents and computers at MFS’s headquarters on Hertford Street behind the Hilton Hotel off Park Lane.
In evidence given to the chief insolvency and companies court on Wednesday, the founder Paresh Raja was accused by counsel for Zircon and Amber of having “fled to Dubai”, according to 9fin, a debt market publication.
Raja is a familiar figure in Asian and financial circles in London, a cheerleader for buy-to-let landlords and a commentator on financial matters in the national press.
The role of regulators is not clear. According to the Financial Conduct Authority’s register, MFS (UK) ceased to be authorised to provide regulated activities and products on February 13, 2026.
Tiba Raja, Paresh Raja’s wife, was also a director of MFS for six years until February 13. The name of Paresh Raja does not appear in the FCA register.
An FCA spokesperson said: “We are unable to comment on individual cases. However, fighting financial crime is a priority for the FCA, and we take credible allegations of criminality very seriously.”
While MFS was supervised by the FCA for its compliance with rules on money laundering, terrorist financing and payment rules, it is not clear how much further the authorisation process went.
Institutional investors including Barclays, Apollo, Jefferies and Wells Fargo are understood to have invested via special-purpose vehicles managed by ten so-called warehouses.
The money was intended to go to borrowers needing bridging loans or mortgages sourced by MFS, which also traded under the Loans Arena name. MFS was also responsible for collecting repayments. According to one source, the investors started to worry because of the absence of some documents on collateral.
The immediate trigger for the collapse was Barclays, which decided to withdraw ordinary banking services to MFS, one source said. Barclays declined to comment.
Amber and Zircon, two of the warehouses, were forced into insolvency after Barclays froze MFS accounts. Amber and Zircon were then used to force MFS into administration this week.
Typically in corporate collapses, the administrators would file a suspicious activity report to regulators if they suspect wrongdoing. These can then lead to investigations by regulators or law enforcement.
The scandal appears to be a fresh blow to the once-booming private credit industry after several high-profile defaults in the US. Those led to Jamie Dimon, the JP Morgan chief, warning there would be more such “cockroaches”.
Raja described himself as working for one of the top five consultancies before founding MFS in 2006. On his LinkedIn page, he says: “Driven by a forward-thinking vision, I have built a robust network of investors, banks, hedge funds, family offices, and international institutions. This ensures that the business is always well-positioned to meet the unique and evolving demands of the growing client base.”
He was contacted for comment.
The collapse comes just two months after the management and staff of MFS were celebrating at a luxurious black-tie Christmas party at The Peninsula London hotel.