Nemo Personal Finance, the secured loan business of Principality Group, is to cease lending after efforts to sell the business failed.
The firm has been up for sale since May 2015 with the Principality citing regulatory changes as its reason for trying to divest the business.
In its annual report Principality Group’s said it had taken a strategic review of both Nemo and the secured loan market over the last 12 months.
And it was this review that encouraged the group to cease lending.
It said: “Over the last 12 months, the Principality Group has undertaken a thorough strategic review of Nemo and the secured loans market.
“As the market continues to develop and expand away from Nemo’s traditional base with product diversification and increased risk through larger loan sizes, the group has made a decision not to increase Nemo’s participation in this market.
“Principality Group undertook an extensive process to identify other potential owners who would be able to take the business forward in a growing market. This process was ultimately unsuccessful.
“The group has therefore taken the decision to cease new lending, including further advances, at Nemo and focus the group’s investment and growth strategy on the core society businesses and its members.
“Nemo will remain a meaningful contributor to group profits and will continue to provide excellent customer service to existing borrowers.”
Matt Tristram, director and co-founder of Loans Warehouse, wished the Nemo team the best moving forward.
He said: “Nemo Loans has been one of the key lenders both for Loans Warehouse and the resurgence of second charge lending since the credit crunch. Nemo Loans was the first lender signed up by Loans Warehouse when we started trading in 2006, personally we would like to thank the team at Nemo for all their support over the years and wish the team all the best.”
Alistair Ewing, managing director of The Lending Channel, added: “Whilst I think they will be a great loss to the second charge market, there is more than sufficient product choice from the diverse range of lenders that remain in the market.
“As a prime lender, Nemo have been struggling to compete with the fantastic headline rates that are available just now and with the recent increase in the use of sourcing systems due largely to MCD, their products simply haven’t been competitive enough.
“In addition with much larger second Charge loans now becoming common place, I think the Principality’s maximum mortgage at only £250k and their 4.99% SVR has put them out of step with where the seconds market is heading and ultimately they don’t appear to have the risk appetite to remain in the game.”
Nemo made £14m of profit in 2015, up from £13.9m in 2014. Its parent Principality Building Society made £57.8m last year, increasing from £51.9m the year before.