UK Watchdog Intensifies Oversight of Unregulated Lenders Over Crime Risks

Britain's financial regulator is tightening its oversight of unregulated lenders, leasing companies, and money brokers over fears they could be used to facilitate financial crime.

The Financial Conduct Authority (FCA) announced on Friday that it has sent information requests to around 900 'Annex 1' firms — businesses that fall under anti-money laundering rules but are not fully authorised by the regulator. These include lenders, leasing companies, and certain other financial entities that often operate through complex structures.

The move follows the collapse of Market Financial Solutions (MFS) in February. The FCA, which supervises MFS for anti-money laundering compliance but does not regulate it as a fully authorised firm, launched a probe into the mortgage lender the following month.

The regulator had previously flagged concerns about the sector. In March 2024, it wrote to Annex 1 firms warning that supervisors had identified weaknesses in their financial crime controls, including inadequate staff training and under-resourced compliance teams. A follow-up letter was issued in 2025.

The FCA said it is concerned about the risks these unregulated lending activities pose to consumers and markets.