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Brokers have begun scrambling to place business with competitors like Paragon Personal Finance after the Welsh lender said it will no longer lend to customers in the light adverse bracket from Friday 11 July.

Plans D, D2, G and G2 will all be withdrawn tomorrow (Friday 11 July), meaning that self employed applicants will also no longer be accepted. Pipeline business will be processed until 5 September 2008.

Speaking exclusively to Money Management, Sam Marshall, managing director of Nemo Personal Finance, said that the business is still considering the best way forward after Barclays pulled the plug on Firstplus.

He explained: "We are still thinking it through and processing what the options are for us at the moment. There are no immediate discussions that we have come to. We are going to take a few days to consider what the options are.

"There are lots of things to consider at the moment. We don’t want to just make a knee jerk reaction. We are currently still lending new business.”

APRs on the remaining plans have been hiked by an additional 2 per cent while intermediary commission on plan A has been increased to 3 per cent. The maximum broker fees have been increased to 10 per cent up to £3,500. The new override commission table will be introduced from 1 August 2008.

Paragon Personal Finance said it is still considering its position but is currently offering near prime clients to be placed.

Paul McGonigle, managing director of Positive Lending, said brokers should split business between the remaining lenders to alleviate risk.

"Paragon has stated it is ok to fund. I would expect changes to product, and I guess a cull in some broker agencies to control distribution."

Barney Drake, managing director of master broker Y3S Group, added: "In the wake of Firstplus withdrawing, remaining lenders are obviously tightening their criteria.

"Their concentration is towards the more squeaky clean customer and this has been shown with the withdrawal of Nemo’s minor adverse plans."