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Supermarket Sainsbury's, private equity group Macquarie and the Bank of England are among the organizations affected by hundreds of “erroneous” applications on the UK companies register.
The documents relate to 190 companies and were allegedly submitted to Companies House by the same person, according to information sent to its members by the bankers' UK Finance trade group and seen by the Financial Times.
Nearly 800 applications filed last month appear to show that property owned by companies has been exempt from fees charged to banks for lending money, meaning the lender will no longer be entitled to take possession of those assets in the event of a default. .
The papers were filed without the knowledge of the affected companies or lenders, according to people familiar with the matter.
The saga raises further questions about the quality and ease of information at Companies House. Both Holy Jesus Christ and Donald Duck were previously named as directors of the company on the register.
Companies House on Monday embarked on an ambitious reform plan as new regulations come into force under the Economic Crime and Corporate Transparency Act. These include greater powers to request evidence from individuals and their companies and to remove inaccurate information from the company register.
In a statement about the new powers, Companies House and the Business Administration said their priority was to “clean the slate”.
Describing the changes at Companies House as “seismic”, financial crime expert Graham Barrow said the misregistrations were “symptoms of an organization that is not fit for the 21st century and is now looking to drag itself into the 21st”. “With its primary means, but without the financial and human resources necessary to do so.”
Bank of Scotland, estate agent Knight Frank and hospitality groups Nero Coffee Roasting, Ask and Zizzi Restaurants were among the borrowers affected, according to a list sent by Companies House and shared by UK Finance.
Some of the UK's biggest lenders are on alert over the issue, including NatWest, Lloyds Banking Group and Barclays. The Bank of England has been named as custodian of at least one of the affected counts.
Many of the files include details of a single individual with an address in County Fermanagh in Northern Ireland. The person could not be reached by phone on Monday.
In two notes to members last week, first reported by Sky News, the FCA warned banks against “apparently erroneous” deposits. She said it had been reported by more than one lender and a number of law firms, and that it “appeared to be random” and had been submitted electronically.
“Company House has confirmed that an incorrect entry in the register – indicating a charge has been made – does not invalidate or cancel the charge,” UK Finance wrote. But she added: “There are likely to be other consequences for lenders that need to be resolved.”
But Neil Reilly, a financial lawyer at DLA Piper, pointed out that lenders rely on registering charges at Companies House to ensure they are ahead of the company's other creditors.
“It's very dangerous for lenders because you need to know that your securities are properly registered so the whole world can see them,” he said.
“If you have honest borrowers and lenders… you have to be consistent in time [to avoid problems],” he added. “It only becomes a real problem when the borrower is in the process of borrowing more money and no one really knows that these fees have been flagged as being met.”
There is no suggestion of wrongdoing by the affected companies or lenders.
Companies House said on Monday it was investigating and had begun an “urgent review” of its operations after identifying the filings in question.
“We have taken steps to block the account associated with these transactions, and using the new powers available to us, we will remove the relevant recordings,” she said, adding that she was working with law enforcement “where appropriate.”
The business administration did not immediately respond to a request for comment.
