Is this the end for rip-off extended warranties?
Which? has long questioned the value of extended warranties purchased alongside TVs, washing machines and fridge freezers. Now the Office of Fair Trading (OFT) wants to see them improved – will it work?
The OFT study stated pointedly that: ‘our report highlights competition concerns in the £1 billion per year market that could mean consumers are not getting the best value for money.’
Dixons, Comet and Argos have offered legal undertakings to improve the way that the extended warranty market works. There will now be a period of consultation on the proposals.
The proposed improvements include a comparison website in order to make it easier to compare prices, more accessible in-store information and an independent mystery shop to ensure that sales staff provide accurate information.
Overpriced and over here
When I started a Conversation on this topic back in December we’d just investigated the market. Our research highlighted how expensive extended warranties could be, with a low likelihood of the appliance actually needing repair within the warranty term.
Many of you voted in our poll, with an overwhelming 93% saying that you don’t think extended warranties are necessary. One of our commenters, Sheri, said she rarely buys extended warranties:
‘As I have never regretted not doing so, I must have saved myself hundreds of pounds over the years!’
And, as commenter Anne pointed out, there is also the fact that you have cover under the Sale of Goods Act if the fault occurs within a reasonable period of time. If you’ve paid by credit card you’ll have the protection of section 75 of the Consumer Credit Act.
We feel that extended warranties are something of an anachronism. Back in the day when white goods and televisions cost relatively more and were more likely to break down, they probably had some value, but less so now.
So where do you stand? Are you pleased that the regulator has acted to ensure that these products will be sold transparently and realistically priced in the future? Do you think that the OFT should have gone further and banned the sale of extended warranties?
Or do extended warranties serve a purpose and provide peace of mind when you buy an expensive electrical appliance?
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