GOV.UK
Legislation: Lending
Most of the lending carried out by an MSB will be as a consumer credit institution. Any lending on commercial terms will generally be carried out by the MSB as a broker for commercial lenders, including those offering commercial mortgages; factoring companies; and lenders that finance commercial transactions, including forfeiting firms. When the MSB acts as a broker they will not fall within scope of the regulations for these activities.
Risks: Lenders are vulnerable to customer fraud, in which case the outstanding loan and interest would be criminal property.
There are other Annexe 1 financial activities that do not require the business to be FCA authorised and it is possible but unlikely that they will be carried out within an MSB supervised by HMRC.