The Principality Building Society has decided to end new lending at Nemo Personal Finance.
It will however continue to service its existing customers. It denied the move was in response to the impending introduction of the Mortgage Credit Directive (MCD).
This comes as the mutual reported a rise in mortgage lending to homeowners to £5.2bn, while underlying profit increased to £57.8m over 2015.
Intermediaries have been informed that all of Nemo’s pipeline will be honoured for CCA cases and commissions will continue to be paid.
New applications can be continued to be scored up until 18 February.
The decision to end secured lending at Nemo puts 67 jobs at risk of redundancy.
Graeme Yorston, group chief executive at Principality Building Society, said: “To ensure that we continue to deliver value for our members, we regularly review our operating model and over the last 12 months we undertook a thorough strategic review of our secured loans subsidiary Nemo. Nemo has had a very positive year with profits of £14.0m and a strong balance sheet reflected in reduced levels of impairment charges. Competition in the market has remained high. Nemo has defended its market share well and concentrated on providing excellent customer service and putting customer outcomes at the heart of its business.
“However the secured loans market continues to develop and expand away from its traditional base. We have carefully managed this business but, as a result of these developments, we do not want to increase our participation in this market.
“The Board has therefore taken the decision to cease new lending at Nemo and focus the Group’s investment on the core Building Society and commercial businesses. Nemo will continue to be a meaningful contributor to our Group as a refocused business which will continue to provide excellent service to its customers.”
In a statement sent to brokers this morning, Joanne Edwards, commercial director at Nemo, said: “I would like to stress that this decision has absolutely no connection with our readiness for MCD, or the potential impact of regulatory change on the market. Having been very recently arrived at, we have communicated this decision at the earliest possible opportunity.”
Principality added that it 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, it said.
More to follow…