Watchdog opens probe into auditors of collapsed lender MFS
The Financial Reporting Council (FRC) has launched an investigation into the conduct of three accountancy firms and individual accountants involved in auditing the accounts of collapsed mortgage lender, Market Financial Solutions.
The accountancy watchdog said it has opened four probes into Magus Chartered Accountants, Berkeley Finch Limited, and Silver Levene (UK), and into a number of individual accountants, for potential auditing failures by the lender, which fell into administration in February following fraud allegations of £1.3bn.
Berkley Finch, which audited Market Financial Solutions’ 2024 financial statements, is being investigated by the FRC for possible failures in the auditing process, while the regulator is reviewing the audit of Zircon Group Limited – a connected entity to Silver Levene – for the same 2024 financial year.
The conduct of Magus Chartered Accountants, alongside the behaviour of two individual accountants from the same firm, is also set to be probed by the watchdog.
The FRC confirmed the decisions to open the investigations were made at a meeting of the FRC’s conduct committee on 21 April, and will be conducted by the FRC’s executive counsel.
“The opening of an investigation does not indicate that the FRC has made, or will make, any findings of breach of relevant requirements or misconduct,” the watchdog said.
A spokesperson for Silver Levene spokesperson said the firm is “aware that the FRC has opened an investigation in relation to the statutory audit of the consolidated financial statements of Zircon Group Limited for the financial year ended 31 December 2024” and that it “will cooperate fully”.
The downfall of MFS
This comes after the UK’s financial watchdog opened an enforcement investigation into the lender that collapsed in February, following its failure to repay £1.3bn borrowed from a group of financial companies before falling into administration.
Paresh Raja, who founded MFS in 2006, was hit by a freezing order by courts in both London and Dubai in March, ordering him to provide details of his assets and banning Raja from spending over £5,000 a week without the consent of MFS’s administrators.
Morning Wire revealed in April that a software platform developed for MFS had been put up for sale, built as an “automated lending platform” that included sales, underwriting, and identity checks for new customers.