ScottishPower pressure to refund £80m ‘cashback’

Scottish Power headquarters in Glasgow. Picture: TSPL
Scottish Power headquarters in Glasgow. Picture: TSPL
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SCOTTISHPOWER is facing parliamentary pressure to refund thousands of customers said to be owed almost £80 million through a controversial money back scheme.

Glasgow North East MP William Bain is one of a group of politicians who want Business Secretary Vince Cable to re-open an inquiry into a scandal that saw 625,000 customers who took out warranties on electrical goods sold by the energy firm miss out on a cashback offer.

Bain said the group will try to put the matter to Cable at the forthcoming questions session for the Department of Business, Innovation and Skills.

“The Business Secretary should be acting now to get a fair deal for consumers,” he said.

The issue relates to a cashback offer made to customers at ScottishPower’s chain of electrical goods stores more than a decade ago. Shoppers who bought a warranty on items such as fridges and washing machines were told that they could get the money back after five years if they had not made a claim.

More than 750,000 such warranties were sold between 1998 and 2001, of which about 625,000 did not make a claim and were therefore eligible for the “cashback” at the end of the period. However, by then ScottishPower had divested its chain of stores to a firm called Powerhouse, which subsequently went into administration.

Two firms which administered and insured the warranties also went bust, and attempts by their administrators to claim money from ScottishPower yielded only £6m.

That is at the core of the dispute which has now resurfaced after Douglas MacDonald, liquidator of Powerplan Company Limited, sent a report to authorities alleging that ScottishPower should have been ­liable for the full amount.

Legal representatives of MacDonald are understood to have written to ScottishPower demanding £79m, which PowerPlan in turn owes to the former customers.

MacDonald has managed to claim back tax in relation to the warranties and is preparing to distribute some funds among the 625,000 creditors. It comes ahead of the annual meeting of Powerplan creditors in Glasgow this week.

About half of the customers owed money are thought to live in Scotland, including around 18,000 in Bain’s constituency.

The MP called on ScottishPower to consider whether it was “genuinely doing the right thing” by not paying up.

But he added: “They have been insistent that they don’t plan to pay out any more, so I think this is where government has the power to step in and re-open an inquiry.”

If Bain and his allies do not get called during the forthcoming parliamentary questions, he says they will raise the matter by other means, possibly by persuading the business select committee, on which he sits, to carry out its own investigation.

“We won’t let this one drop,” he said. “It’s people on low incomes who have suffered the most and faced the worst rip off because of this.”

A ScottishPower spokes­person said: “The PowerPlan extended warranty scheme, which was one of a number of similar extended warranty products offered by retailers across the industry, did not involve any wrongdoing by ScottishPower.”

He said ScottishPower “does not agree with the picture presented” by those trying to hold it liable, and will therefore “strongly defend its position against any action that may be taken”.