MPs claim ScottishPower PowerPlan Cashback warranty was ‘a fraud’

The energy giant has allegedly failed to pay 625,000 customers up to £75 million.

A group of MPs has accused energy giant ScottishPower of mis-selling warranties on appliances in the early 2000s and subsequently trying to cover it up.

The PowerPlan Cashback warranties were sold alongside white goods through the firm’s High Street stores and promised a refund of the deposit paid if customers didn’t make a claim within five years.

However, an All-Party Parliamentary Group (APPG) formed of 28 MPs alleges the firm has failed to pay out £75 million to 625,000 people across the UK, claiming it was "effectively a fraud on the public".

The MPs are now calling for a Parliamentary Select Committee to hold ScottishPower executives to account for their actions and get justice for those that were mis-sold the polices and failed to receive the money they’re entitled to.

ScottishPower denies any improper conduct and has described APPG's findings as "demonstrably wrong".

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Cashback warranties

ScottishPower used to have around 150 retail stores that sold TVs, fridges, washing machines and other white goods during the late 1990s and early 2000s.

Cashback warranties were sold alongside these products, via a subsidiary called PowerPlan Company Ltd, which promised your deposit back if you didn’t make a claim within five years.

In 2001, ScottishPower sold their stores to Powerhouse but there was a clause in the deal stating that existing PowerPlan Cashback warranty policies would be handled by ScottishPower.

But in 2004/05 when thousands of people began claiming their cashback, APPG claims ScottishPower reneged on the agreement.

Powerhouse subsequently went bust and 625,000 customers never got their money back. The APPG estimates says ScottishPower owes these people £75 million.

Time to ‘sit up and take notice’

Andrew Percy MP, who launched the report and is the Chair of the APPG, slammed regulators and ScottishPower over the scandal.

He said: "We have been shocked by the complete lack of uptake by regulators and authorities to date, and I expect this report to make them sit up and take notice.

 "There is no doubt in our mind that selling a Cashback Promise that was neither financially capable of functioning, nor designed to deliver, is effectively a fraud on the public - and they have been covering it up ever since.

“Indeed, we do not believe it was in ScottishPower's gift to sell on that promise (which was to their customers) to another retailer in the first place. It is high time they were held accountable and I look forward to taking this report to our meeting with the Minister next week (27 April 2016), I am sure he will agree with our assessment." 

What ScottishPower says

ScottishPower told loveMONEY that it has done nothing wrong. "We are extremely disappointed by the content of this report," a spokesperson said.

"For a period of months we have responded in detail to a series of allegations that are both factually and legally flawed.

"The company is concerned that the findings of the APPG are not only demonstrably wrong but ignore evidence put to the group in writing and some very basic legal principles.

"This matter has been the subject of a number of reviews, which have found no evidence of improper conduct on the part of ScottishPower or its advisers.

"As we have said over a period of years, ScottishPower emphatically rejects any suggestion of wrongdoing in relation to the PowerPlan scheme.

"In addition, this matter is the subject of threatened proceedings and in those circumstances ScottishPower does not propose to comment further."

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