Investors in the collapsed mortgage lender Market Financial Solutions (MFS) have called on the Financial Conduct Authority (FCA) to investigate Barclays over its relationship with the company, which is at the center of an alleged £1.3 billion fraud. The calls for scrutiny come amid claims that Barclays, as both MFS’s corporate bank and one of its principal institutional lenders, may have missed warning signs or failed to report concerns that could have mitigated the fallout from MFS’s collapse.

MFS was placed into administration in February after a High Court judge ordered an inquiry into allegations of misconduct. The former chief executive, Paresh Raja, is accused of orchestrating a complex scheme involving double pledging—securing multiple loans against the same properties—to misappropriate funds. Insolvency practitioners say Raja extracted "vast sums" estimated at £1.3 billion from the lender. He denies the allegations, asserting that there was no fraud or dishonesty.

At the time of its failure, MFS held a loan book valued around £2.6 billion, with exposure involving major financial institutions including Barclays, Apollo’s Atlas SP, Elliott Management, Wells Fargo, Castlelake, Jefferies, and Santander. Barclays is reported to have had approximately £500 million in outstanding exposure.

The MFS Creditors Action Group, representing roughly 100 private investors owed an estimated £200 million, urged the FCA to examine Barclays’s role. Paresh Dabasia, executive director of the group, said that Barclays was “not a passive bystander” in the collapse. He alleged the bank froze his accounts and cut ties with him after MFS failed, an experience shared by other affected individual investors who bank with Barclays. Dabasia described the bank’s actions as a “bitter irony” given its close involvement with MFS.

Barclays declined to comment on the allegations or on claims of “de-banking.” The bank froze MFS’s main accounts in November 2025, reportedly due to suspicions of money laundering or other criminal activity connected to the lender. This move came after reports linking MFS to a corruption scandal in Bangladesh involving former land minister Saifuzzaman Chowdhury, who has denied wrongdoing and claimed the investigation was politically motivated. Assets connected to these allegations were later frozen by the UK’s National Crime Agency.

The creditor group highlighted that Barclays provided banking services not only to MFS but also to a network of businesses linked to Raja and his wider group, giving the bank extensive insight into the group’s financial structure and cash flows. They argued this position uniquely equipped Barclays to detect irregularities earlier than other parties, including the FCA. They questioned whether Barclays’s response was aimed at protecting the wider market or primarily its own financial interests, noting that a portion of Barclays’s exposure was refinanced by Wells Fargo shortly before the accounts were frozen.

Further concerns were raised about due diligence, noting that Raja had bankruptcy-related restrictions between 2006 and 2009 preventing his involvement in company management, yet MFS was formally founded during this period by Pratibha Dewan, Raja’s future wife. Raja only became a director in 2017 but was often described as the company’s founder. The creditor group argued this history should have warranted increased scrutiny rather than diminished oversight.

An FCA spokesperson confirmed that an enforcement investigation into MFS has been launched and invited anyone affected by the collapse to provide information. The regulator has yet to comment specifically on Barclays’s conduct.