OFT acts to improve competition in extended warranties

[Michael Browne]

27 June 2012

The OFT today accepted legally enforceable undertakings offered by the three largest UK electrical retailers to improve the way the extended warranties market works, following consultation with business and consumers.

 

The OFT's market 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.

 

To address these concerns, the OFT worked with Dixons, Comet and Argos to agree undertakings, which take into account points raised during the consultation, rather than referring the market to the Competition Commission (CC).

 

Dixons, Comet and Argos have agreed to:

 

Maintain and publicise an independently operated extended warranties price comparison website, to make shopping around easier.

 

Provide more easily available information via in-store leaflets and retailer websites, including on the availability of alternative warranty providers.

 

Conduct regular independent mystery shopping exercises to help ensure shoppers get accurate information from sales staff - and report the results to the OFT.

 

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. This currently affects Dixons as the only one of the three retailers to sell PAYG warranties.

 

http://www.oft.gov.uk/news-and-updates/press/2012/53-12