Portillion has withdrawn its FSA banking application and decided not to pursue becoming a mortgage lender.
Its Farnborough office has been closed and all the staff have been made redundant.
The firm was originally set up towards the end of 2007 as Checkmate Mortgages by Stephen Knight, previously chairman of GMAC-RFC, and Martin Finegold, founder of Kensington Mortgages.
Checkmate Mortgages rebranded to Portillion in 2010 and Stephen Knight stood down in February 2011 after being diagnosed with a brain tumour.
Last year Portillion had intimated that it would open for business in 2012 assuming the FSA would grant a license.