The firms, unregulated lenders registered with the FCA only for anti-money-laundering supervision, accepted restrictions on new customers and new lending. They are small lenders, not institutional private credit funds.
The U.K. Financial Conduct Authority has restricted six small lenders from writing new loans after finding problems with their anti-money-laundering controls.
The six are unregulated lenders that are registered with the regulator as so-called Annex 1 firms, a category supervised only for money-laundering compliance. The FCA said concerns about their policies, controls and procedures arose while it was assessing their applications.
Each firm accepted voluntary restrictions at its own request. The restrictions bar new customers and new lending, including extensions of existing credit. Some also restrict accepting payments from existing customers and require independent reviews of the firms' anti-money-laundering systems.
Some restrictions include limited exceptions. The firms are Kingscrown Finance, restricted in April and required on Sept. 25 to wind down its business; MOMSB and Momentus Capital, on Oct. 7; Grosvenor Funding and Grosvenor Funding (North West), on Oct. 9; and Abbital, on Oct. 15.
What this is, and what it is not
The lenders are small, specialist operators. They are not the institutional private credit funds and asset managers that have drawn investor attention this year, and nothing in the FCA's action involves those firms.
The significance is regulatory. The Annex 1 regime is a light-touch registration, and the FCA is using it to scrutinize lenders that sit outside its full authorization regime. The action comes months after the collapse in February of Market Financial Solutions, a London bridging lender that the FCA is investigating.
Why it matters
Using anti-money-laundering supervision as a tool gives the FCA a way to examine lenders it does not otherwise authorize, which may lead to closer oversight of the smaller end of the market.
For institutional investors, the action is a signal about the direction of U.K. oversight, not evidence of stress in the asset class.
What to watch
Whether the FCA extends similar reviews to other Annex 1 lenders, the outcome of the independent reviews, and any wider changes to how the U.K. supervises non-bank lending.