Shops to launch warranty comparison website

Major UK electrical retailers will set up a price-comparison website for extended warranties as part of a series of measures to placate competition authorities.

Consumer watchdog the Office of Fair Trading (OFT) has accepted the proposals put forward by Dixons, Comet and Argos - the largest providers of such warranties.

As well as maintaining a price-comparison website, the retailers will conduct regular mystery shopping exercises and provide in-store leaflets on warranty providers as part of a legally-enforceable drive to prevent consumers being cheated.

The OFT's study of the £1 billion per year extended warranties market, published in February, highlighted a number of competition concerns that could mean customers are not getting the best value for money.

The OFT was concerned that only a quarter of consumers shop around for warranties, mainly because retailers have a point-of-sale advantage in being able to sell warranties at the same time as they sell the goods.

Ann Pope, director in the OFT's goods and consumer group, said: "We think the undertakings we have secured are important for shoppers, who will now have better access to the information they need to make an informed decision when choosing an extended warranty.

"We welcome the constructive approach taken by Dixons, Comet and Argos to agree this practical solution, which will bring more immediate benefits for consumers, and avoid the burden on business of further investigation."

Dixons has also agreed to provide clear on-shelf information about the annual equivalent prices of Pay As You Go (PAYG) warranties, to help shoppers understand the longer-term costs when they enter these rolling monthly contracts.

Dixons is the only one of the three retailers to sell PAYG warranties.

The Financial Ombudsman Service (FOS), which deals with complaints against financial service companies, said it continued to see high levels of complaints about warranties, with 881 new complaints received last year.

The FOS is upholding two-thirds of complaints in the consumer's favour, with the main themes being mis-sold policies, misleading policy wording and the insurer inadequately putting things right to settle the claim.

PA