Extended warranties inquiry toned down
New consultation on alternative remedies
July 23 2003
The UK Competition Commission has scaled back plans to crack down on the extended warranties for electrical products.
Following a robust defence of the market by UK retailers, spearheaded by Dixons, the commission has sent out a second remedies letter, effectively asking the industry to comment on two possible packages of remedies.
The focus of each package is on the way information is given to consumers. Each would require retailers to display the price and duration of the warranty alongside the price and in any publicity material; provide consumers with written information on warranties including details of alternative providers; give consumers a written quote which includes a cancellation period; and abide by an independent code of practice which covers selling practices.
The second package would be more stringent. It would include include broadly the same requirements as the first, but would go further by requiring retailers not to complete the sale of a full warranty on the day of the sale, and limiting the term of warranties sold in store to one year.
A number of remedies previously proposed by the commission have been dropped, including a requirement to provide warranties on products sold by other retailers and limits to sales incentives.
The Commission said it believed “information, and the opportunity and time to make a genuine, transparent, choice” will stimulate competition in the market for warranties and “lead to significant improvements in value for consumers.”
Retailers have been asked to comment on the new proposals by August 5, with the commission to publish a further report by September 30.
