ScottishPower warranty labelled '˜fraud on the public'

A ScottishPower warranty scheme that allegedly failed to pay out £75 million to hundreds of thousands of customers was 'effectively a fraud on the public', according to a report by MPs.

ScottishPower's stores were sold to PowerHouse, which fell into administration in 2006. Picture: Chris Young/PA
ScottishPower's stores were sold to PowerHouse, which fell into administration in 2006. Picture: Chris Young/PA

The cashback warranty promise sold to 625,000 people across the UK – many of them pensioners – was “neither financially capable of functioning, nor designed to deliver”, the cross-party group concluded.

The All-Party Parliamentary Group (APPG) heard evidence from liquidators, regulators, former customers and employees regarding the warranties sold on white goods under the PowerPlan scheme through the energy firm’s chain of 150 high street stores in the late 1990s and early 2000s.

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Customers were promised a full refund of the warranty if no claims were made within five years.

However, many were left without refunds after the stores and ScottishPower’s insurance arm, Domestic Appliance Insurance Limited, were sold to PowerHouse, which subsequently went into administration.

Glasgow-based ScottishPower has denied any wrongdoing.

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The MPs are now calling for a formal Select Committee hearing “so that ScottishPower executives can be called to account for their actions before Parliament, opening the way to achieving some form of justice, including compensation, for those consumers who are affected”.

The APPG chairman Andrew Percy said: “Over the past year this group has been compiling evidence from many sources, including liquidators, regulators, former customers and employees on how this came to pass. Much of that evidence made detailed allegations of fraud, criminality and more.

“Therefore, we have been shocked by the complete lack of uptake by regulators and authorities to date, and I expect this report to make them sit up and take notice.

“There is no doubt in our mind that selling a cashback promise that was neither financially capable of functioning, nor designed to deliver, is effectively a fraud on the public – and they have been covering it up ever since.

“Indeed, we do not believe it was in ScottishPower’s gift to sell on that promise – which was to their customers – to another retailer in the first place.

“It is high time they were held accountable and I look forward to taking this report to our meeting with consumer minister Nick Boles next week. I am sure he will agree with our assessment.”

A ScottishPower spokesman said: “We are extremely disappointed by the content of this report.

“For a period of months we have responded in detail to a series of allegations that are both factually and legally flawed.

“The company is concerned that the findings of the APPG are not only demonstrably wrong but ignore evidence put to the group in writing and some very basic legal principles.

“This matter has been the subject of a number of reviews which have found no evidence of improper conduct on the part of ScottishPower or its advisers.

“As we have said over a period of years, ScottishPower emphatically rejects any suggestion of wrongdoing in relation to the PowerPlan scheme.

“In addition, this matter is the subject of threatened proceedings and in those circumstances ScottishPower does not propose to comment further.”