OFT to probe value of extended warranties

Consumer watchdog the Office of Fair Trading today launched a rapid probe into the sale of extended warranties on electrical goods. It said it wants to see if consumers are getting value for money in the £750-million-a-year plus market.

The regulator tried to take action against sellers of extended warranties in 2005 with special orders on how they were sold. But three years later it calculated that consumers were still being ripped off to the tune of almost £350 million.

"Consumers buy millions of extended warranties on domestic electrical goods each year and we want to make sure they are getting value for money," said Claudia Berg, director in the OFT's consumer and goods group.

The watchdog wants to complete the study by the end of summer, and could take more action against suppliers of warrants or even refer them to the Competition Commission.

The country's biggest electrical goods retailers who make the most money from extended warranties include Dixons, Kesa, Argos, Carphone Warehouse and John Lewis.

The OFT also said it had decided against a probe into the repair of electrical goods on the grounds that it had not seen enough evidence that manufacturers were restricting supplies of parts to favoured repair firms.