Orchard Funding Group shares were sent over 30% lower this Friday due to concerns over its guaranteed asset protection (GAP) offering.
GAP protection is designed to cover the difference between the current market value of a vehicle and its original purchase price in the event of damages or theft, as an insurer typically deducts depreciation when paying out to customers.
Following a recent Financial Conduct Authority (FCA) review into GAP, the watchdog instructed at least five insurers to stop issuing these niche products.
“The withdrawal of these insurance products is likely to have a material adverse impact on the company's financial results over the current financial year,” said Orchard, although it is unclear whether Orchard was instructed to stop selling GAP by the FCA.
Over 20% of Orchard’s revenues come from GAP insurance products.
“The group will provide further updates as appropriate in due course, as it continues to assess the impact of GAP insurance product withdrawals and works to redeploy these assets,” said Orchard.
Shares were swapping for 22.5p at the time of writing.