Barclays cuts back risky lending after £228m hit from UK mortgage firm MFS

Barclays is pulling back from lending to risky borrowers, as its chief executive warned of increasing numbers of fraud cases and the bank took a £228m hit from the failure of a mortgage lender. The mortgage lender Market Financial Solutions (MFS) collapsed in February amid allegations of fraud and the UK’s financial regulator has since launched an investigation into the scandal. Barclays provided banking services to MFS and said the £228m hit had pushed total credit impairment charges to £823m in the first three months of 2026, up from £643m a year earlier. Last year, the British bank reported a £110m loss over the US sub-prime auto lender Tricolor , which collapsed amid fraud allegations . The chief executive, CS Venkatakrishnan, said: “This [alleged] fraud, as with the one in Tricolor, indicates to us the importance of strong financial controls at borrowers and the difficulty ex-ante of identifying fraud. “As such, we are constraining lending to certain structured finance counterparties who operate more vulnerable business models and cannot convince us of the quality and independence of their financial controls.” Losses stemming from the collapse of MFS, Tricolor and the US auto parts company First Brands (with allegations of fraud or mismanagement in all three cases) have raised fears over lending standards in the $2tn private credit industry, which has come under greater scrutiny from regulators. …