The UK’s Financial Reporting Council (FRC) says it has initiated an investigation into several small accountancy practices that worked for collapsed mortgage lender Market Financial Solutions (MFS).
According to a Financial Times (FT) report, MFS and a series of entities owned by founder Paresh Raja went into insolvency in February.
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Creditors that had reportedly lent more than £2bn ($2.6bn) to the group have since alleged fraud. The collapse has sharpened scrutiny of underwriting in asset-backed lending.
Different parts of Raja’s lending businesses were audited by a number of small practices rather than through a single consolidated group audit by a large company.
The FRC is investigating Berkeley Finch, which issued an unqualified opinion on MFS’ 2024 accounts, and Silver Levene, which audited Raja’s Zircon Group in 2024.
Berkeley Finch received £72,375 for its 2024 audit of MFS. When MFS failed, it owed money to Barclays and to a unit of Apollo Global Management.
However, Silver Levene told the FT that the investigation does not imply any wrongdoing but confirmed the company will fully cooperate.
London-based Silver Levene was acquired last year by Xeinadin.
The FRC is also examining Magus Chartered Accountants and two unnamed accountants over their work on MFS and other related companies. Magus assisted in preparing MFS’ financial statements.
Raja is subject to a worldwide freezing order. He disputes the allegations in the administrators’ claim, the FT added.
The regulator said a third unnamed accountant is also under investigation. Other high street practices that audited MFS-linked entities have not been identified in the current action.
