Retailers propose measures to improve extended warranties

Major retailers propose measures to avoid the Office of Fair Trading referring extended warranties to the Competition Commission.

The Office of Fair Trading (OFT) has announced the results of a study into extended warranties.

It was launched after complaints that warranties don’t offer value for money and that there is little obvious competition on price. While the OFT found that prices had come down slightly, it still had concerns about the competitiveness of the market.

As a result, major retailers including Argos, Comet and Dixons have proposed a series of measures to avoid the OFT referring the issue to the Competition Commission.

The proposals include the launch of an extended warranties comparison website, more in-store information on other extended warranty providers and clearer information on the actual cost of the warranties, particularly rolling monthly pay-as-you-go warranties.

Retailers have also agreed to conduct regular mystery shopping exercises and report the results back to the OFT.

Only around a quarter of us shop around for extended warranties and the OFT estimates that the market is worth £1 billion a year.

It will now consult on whether these proposals go far enough and whether to refer the market to the Competition Commission. It expects to announce its conclusions in the spring.

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