The City watchdog has revealed it is investigating allegations of insider trading at the building and services contractor Carillion before its collapse in January.

In a letter to MPs, the Financial Conduct Authority (FCA) chief, Andrew Bailey, said he was looking into allegations that people connected to the company had traded in its shares using inside knowledge before Carillion’s huge profit warning on 10 July 2017.

The shock warning started the chain of events that led to the collapse of the business.