LONDON, March 20 (Reuters) - Britain's financial

regulator said on Friday it had launched an enforcement

investigation into mortgage lender Market Financial Solutions,

which collapsed in February leaving creditors including major

banks and private credit funds facing a shortfall in excess of

1.3 billion pounds ($1.74 billion).

The Financial Conduct Authority said in a statement that

London-based MFS was only registered with it and supervised for

compliance with money laundering, terrorist financing and

transfer of funds regulations, and not for wider financial

regulation.

London-based MFS, a little-known lender that specialised in

complex property-related loans, was placed into administration

at the end of February, following allegations of financial

irregularities and mismanagement.

The collapse revived concerns over banks' and private credit

funds' lending practices as investors grow jittery about risks

in wider credit markets. Barclays Santander

Jefferies, Elliott Management and Apollo-affiliated

Atlas ​SP Partners are among the lenders with exposure to MFS,

sources have previously said.

Officials at the Bank of England's prudential arm have requested

information from lenders about funds they ⁠extended to MFS, and

are concerned ​banks may not have carried out sufficient due

diligence, a Financial Times report from earlier in March said.

AlixPartners, the administrators for MFS, said they were

aware of the investigation and declined to comment further.

($1 = 0.7466 pounds)