A guaranteed rip-off? Shops forced to come clean on warranty deals
Stores to provide more information and launch comparison website
Following stints with Reuters and the Press Association, Martin Hickman joined The Independent as a news editor in 2001. He became the Consumer Affairs Correspondent in September 2005 and has run the paper's trenchant campaigns on packaging, bank charges and factory-farmed chicken. He writes on subjects as diverse as food, finance, energy and fashion. With Tom Watson, he is author of a new book on the phone hacking scandal, Dial M for Murdoch - News Corporation and the Corruption of Britain.
Wednesday 08 February 2012
Comet, Dixons and Argos have agreed to overhaul the way they sell warranties for electrical goods in response to an Office of Fair Trading investigation which found they were poor value.
Click HERE to view graphic
The retailers have agreed to sign legal undertakings to give more information about the cost of the products, launch a website to allow consumers to compare them and conduct mystery-shopper exercises to check the patter of shop assistants.
Consumer groups have long complained that extended warranties – which offer to fix a product if it goes wrong in return for an advance fee – are a rip-off. Of particular concern are Pay As You Go warranties with rolling monthly contracts, which are far more expensive than comparable fixed-term warranties.
The OFT found that competition in the £1 billion-a year market was limited because most of the warranties were sold to customers at the time they bought electrical goods, with only one quarter of consumers shopping around, a much lower proportion than for other insurance policies.
The OFT added that the stores gave shoppers too little information to allow them to make "an informed decision" about whether the product was value for money.
"Millions of extended warranties are sold in the UK each year and we remain concerned that, despite recent improvements, this market does not work as well as it could for consumers," said Ann Pope, director of the OFT's goods and consumer group. "We welcome the retailers' initiative in offering undertakings and we now want to hear from consumers and others whether they think these will lead to improvements."
By this spring, the three retailers are expected to sign agreements agreeing to establish, maintain and publicise an extended warranties comparison site to make shopping around easier; provide in-store leaflets making consumers aware that they can buy the products elsewhere; and conduct regular independent mystery shopping to ensure their sales staff are giving out accurate information – and report the results back to the OFT.
They also agreed to provide clear information about the annual equivalent prices of Pas As You Go warranties, though currently Dixons is the only one which sells them.
The consumer group Which? welcomed the changes but urged retailers to provide better value products in the first place. Its executive director, Richard Lloyd, said: "Which? is pleased that the OFT agrees with us that extended warranties do not offer the best value for money. Our research highlights that many of the warranties on offer today are worse value than ever before and ignore the fact that appliance reliability has improved significantly. We want to see better products at reasonable prices and for people to feel clear about what they are buying."
He added: "Providing more accessible information in-store will not... solve the problems with extended warranties and we look forward to seeing the results of the consultation period over the next few months."
The Financial Ombudsman upholds two-thirds of the 900 complaints it receives about warranties annually.
Following an OFT investigation into the warranties in 2001, the Competition Commission ordered retailers to give shoppers more information about the warranties and to allow them to be cancelled.
Kirstie Allsopp has waded into the female fertility debate again
Gillian Anderson lays into gender disparity in Hollywood
- 1 Snoop Dogg and Jared Leto buy a stake in Reddit as A-list invests $50m
- 2 Prince held a Facebook Q&A and this is the only question he answered...
- 3 'F*ck it, I quit': KTVA reporter Charlo Greene quits live on air in spectacular fashion
- 4 35,000 walrus gather on north-west Alaska beach 'for a rest'
- 5 Brad Pitt, on the moment he completely lost his temper with Clint Eastwood's son
Exclusive: 'Putin's Russia has been my biggest regret,' says Nato's outgoing Secretary General
Former Tory donor Arron Banks ups his Ukip donation to £1million following William Hague 'nobody' comment
The Osborne Ultimatum: Chancellor’s benefits freeze bombshell will affect ten million households
There’s no excuse for Dave Lee Travis’s behaviour, but we need to keep a sense of proportion
Mark Reckless becomes second Tory MP to defect to Ukip in a month
Should gay sex be illegal? 16% of Britons think so
- < Previous
- Next >
iJobs Money & Business
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...
NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...
£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...
Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...
Day In a Page
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors