Electrical retailers frequently sell extended warranties as an add-on when a customer buys electrical goods. Typically these can add around 50% to the cost of the product, while customers are offered only one supplier's extended warranty and terms and are given no information about other suppliers' warranties or about the likely costs of repairs in the future.
Following complaints by consumers and consumer groups, in 2002 the Director General of Fair Trading formally asked the Competition Commission to investigate the market. The Competition Commission did so, finding that the extended warranty market was not working as well as it should, with consumers often being put under pressure to sign up to an extended warranty at point of sale.
In July this year the Department of Trade and Industry launched a consultation on its proposals to solve the problem. It recommended that, by Christmas, retailers should:
Most of these proposals were, according to the DTI, welcomed by consumer groups, and many of the changes have already been put in place by some major retail chains. But other businesses have expressed concern about the speed of change and asked for the necessary legislation to be delayed until after Christmas.
Implementation has therefore been delayed, giving the DTI time to consult further on technical changes to the proposed rules. These include:
The consultation will remain open until 20th December.