You know the drill. You book a holiday and the travel agent tries to tag on travel insurance. Or you’re offered a great deal on an extended warranty for your new washing machine. But are these add-on products worth it?
It’s been a busy week in the news for add-on financial products. The Financial Conduct Authority (FCA) has launched a market study this week into whether these products really represent good value for money.
In the meantime, the Office of Fair Trading has launched its new comparison site for extended warranties, helping potential buyers to shop around.
Putting on the pressure
I’ve had to endure the all-too-familiar extended warranty pitch this week as I tried to buy a new TV from Currys. Credit card in hand I was ready to pay and escape, but the salesman had other ideas. It seems he was determined to sell me a ‘Whatever Happens’ care plan on my new telly.
When I told him that my home insurance policy covers me for accidental damage, he said my insurer would only cover a repair and not a replacement, even though he didn’t know who I’m insured with. I said no.
Trying a different tack, he said that I’d be covered under the warranty if the TV turned out to be faulty. I had to explain to him that I’m already covered by law under the Sale of Goods Act. I certainly don’t believe this is the sort of advice a major retailer should be giving out.
FCA should investigate sales practices
Personally, I think extended warranties are often a waste of money, but they’re clearly a money-spinner for retailers. It’s the financial services equivalent of ‘Would you like fries with that?’ Retailers turn on the hard sell in the hope that you’ll say yes in the heat of the moment.
Even if I had been interested in the warranty for my TV, there was no way I would have had time to read the full terms and conditions before signing up in-store. And when the FCA asked consumers to look at their add-on policies, many of them were surprised to find they weren’t as well covered as they’d thought.
And this brings me back to the FCA’s investigation into the wider add-on insurance market. My experience in Currys leaves me in two minds about it. It’s good news that the FCA will look at the products’ design and value for money. However, it’s disappointing that it won’t look at the way these products are sold.
Has a retailer tried to sell you an add-on insurance product when you’ve tried to buy a laptop, holiday, car or TV? Were you tempted by the offer?