Personal Touch Financial Services (PTFS) has announced the closure of its secured loan business as a result of the lack of funds in the secured loan market.

The PTFS stated that although Needaloan.co.uk will still be offering secured loans, it will be through a white label proposition with Gateway2Finance.

Dev Malle, sales director of PTFS stated that the decision was made to pull out of the second charge market due to the insufficient funding.

Gateway2Finance would be managing all the pipeline business, pay commissions and employ Needaloan staff.

He said: "It was fairly straightforward with the economics of things in the current market on second charges."

John Stewart, director of PMI IFAs said: "It must be very difficult for [PTFS] to be able to place business. If first charge is difficult, second charge is going to be more difficult because they are a higher risk."

And with consumers attempted to reduce their debt during the recession, Mr Steward stated that he did not believe there would be a great demand for secured loans unless it was absolutely necessary.

He said: "There is no question people are battening down the hatches and trying to reduce debt rather than increase at the moment. So that is going to have a knock-on effect on all areas of business.

What with the worries about jobs and security the number of enquiries are less, therefore the applications are less."