OFT force shops to sort out extended warranty sales
The Office of Fair Trading have forced the hand of Comet, Dixons and Argos to make some big changes to the way they sell extended warranties to customers, with the retailers agreeing to maintain and publicise an independently-operated price comparison site for extended warranty insurance products.
As well as this price-comparison site (which will probably get investigated in a few years time), the retailers will also be providing information that's more easily available via in-store leaflets, through the websites and will offer the availability of alternative warranty providers.
On top of all that, they'll have to provide clear on-shelf information about the annual equivalent prices of 'Pay As You Go' warranties, so that customers will truly understand how much these rolling contracts will cost long-term. Independent mystery shopping exercises will ensure that the companies are playing by these new rules.
These rules have come into place after the Financial Ombudsman Service revealed that they'd been receiving a high number of complaints about these warranties, with the most common complaint being that the insurance didn't cover repairs or replacement of electrical and white goods after the manufacturer's guarantee has expired.
Ann Pope, a director of the OFT's goods and consumer division, 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."