Electrical retailers plan big shake-up for warranties

The promised measures, which have been agreed with Dixons, Comet and Argos – the largest providers of such warranties – include improving the information these retailers provide to shoppers and the launch of a comparison website.

They will also carry out regular independent undercover shopping exercises as part of a drive to prevent consumers being ripped off.

The undertakings agreed with the OFT will be the subject of consultation before the watchdog decides whether to refer the market to the Competition Commission for detailed investigation.

It is concerned that only a quarter of consumers shop around for warranties, as retailers have a point-of-sale advantage in being able to sell warranties as they sell the goods.

There is also a lack of relevant information for shoppers to make an informed decision about whether the warranty is value for money, the organisation added.

Ann Pope, director in the OFT’s goods and consumer group, said: “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.

“We welcome the retailers’ initiative in offering undertakings and we now want to hear from consumers whether they think these will lead to improvements.”