High-flying Tory MP Johnny Mercer has hit back at claims he is linked to a scandal at collapsed savings firm London Capital & Finance.

Mercer – who is paid £85,000 a year as a non-executive director by Crucial Group, a firm with ties to the LCF disaster – insisted he is being smeared.

LCF sold toxic bonds to savers promising returns of 8 per cent, but has since gone bust owing £237m to 11,500 people.

Fighting talk: Tory MP Johnny Mercer, a former soldier, insists he is being smeared

The Serious Fraud Office is investigating LCF and has made four arrests.

Bonds were marketed on LCF's behalf by Surge Financial, which was paid fees of £58m – representing as much as 25 per cent of each saver's cash.

The company's partner firm Surge Group and its founder Paul Careless own a controlling stake in the firm where Mercer works. Accounts show money flowing between them.

Mercer – tipped as a future Prime Minister – was made a director of Crucial in September last year.

The 37-year-old is a former soldier, and Crucial runs an academy which trains veterans in cyber security.

He said Surge is not part of the SFO investigation into LCF and has done nothing wrong, adding: 'They are however suffering trial by media.

'This effort to smear me by some loose connection to a company that I have never met, done business with or even heard of before its collapse is besmirching the good name of an exciting project at Crucial Academy run by good people doing good things.'

Accounts show that Surge Group was given an interest-free loan of £8.8m by Surge Financial in the 15 months to September 30, 2018.

Separately, Surge Group made a £325,095 interest-free loan to The Crucial Group.

It is the first evidence of money moving between the three companies.

Mercer said he has 'sought and received rigorous assurances that no money whatsoever had gone from LCF into Crucial Academy'.

The MP added that there is no connection between Crucial and LCF.

Crucial is based in the same Brighton office as Surge.

The Surge Group accounts state it is at risk of collapse because it relies on support from another firm under the same control, and this may be about to dry up.

A spokesman for Surge said it complied with FCA rules, did not handle client money and was not involved in deciding where the funds should be invested.

There is no suggestion Mercer has done anything wrong.