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Extended warranties for electrical goods

18 December 2003

The OFT has published its advice to the Secretary of State for Trade and Industry regarding the Competition Commission report on extended warranties for domestic electrical goods.

Download advice (pdf file 153 kb)

See Competition Commission's home Page of the Extended Warranties for Domestic Electrical Goods Inquiry.

22 October 2002

See OFT press release advising shoppers to think before taking out extended warranties.

2 July 2002

The OFT has referred the market for the supply of extended warranties on domestic electrical goods, worth over £500 million a year, to the Competition Commission. See Competition Commission website.

This follows the investigation which found that competition in the market did not appear to be working effectively and that consumers were not adequately informed or protected. The study looked at both consumer protection and competition issues together and found:

the effectiveness of competition in the market appears to be limited. Extended warranties are frequently purchased as an afterthought. Consumers do not shop around for the best value policy and the retailers' point of sale advantage makes it difficult for alternative suppliers to enter the market
consumers are largely unaware that extended warranties can be bought from other sources, such as manufacturers and insurers, as well as electrical retailers
the sales tactics of some retailers appear to exploit limited consumer information
the costs of extended warranties do not reflect the considerable variation in different brands' reliability. Consumers have limited information on these issues and so limited opportunity to make informed choices
self regulation has not worked effectively.

Download the OFT report Extended warranties on domestic electrical goods in pdf format (137 kb).

See press release.