Major UK electrical retailers are to set up a price comparison website for extended warranties after pressure from competition authorities.
Consumer watchdog the Office of Fair Trading (OFT) has today accepted legally-binding pledges from Asda, Comet and Dixons – the largest sellers of such warranties – to improve the way the market works.
As well as starting an independently-operated extended warranties comparison website, due to be up and running by Christmas, they have also agreed to:
- Conduct regular independent mystery shopping exercises to make sure sales staff give shoppers the correct information.
- Provide in-store leaflets and online information on warranty providers.
- Dixons, which owns Currys and PC World and is the only retailer to sell pay-as-you-go (PAYG) warranties, has also agreed to provide clear on-shelf information about the annual equivalent prices of PAYG warranties, to help shoppers understand the longer term costs when they enter these rolling monthly contracts.
If the retailers don't comply with the undertakings, they can be taken to court.
Consumers 'not getting best value for money'
The agreement comes after the OFT's study of the £1 billion per year extended warranties market, published in February, highlighted a number of competition concerns that could mean customers are not getting the best value for money.
For example, the OFT found only around a quarter of consumers search for the best extended warranties, while often shoppers do not have enough information to make a decision on whether they are value for money.
Ann Pope, of the OFT's Goods and Consumer Group, says: "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."
Additional reporting by Helen Knapman.