Dixons welcomes OFT warranty study

Dixons, Comet and Argos have pledged to improve the way the extended warranties market works, the OFT revealed today.

The promised measures include improving the information the retailers provide to shoppers and the launch of a comparison website.

The OFT will consult on whether to accept the measures instead of referring the market to the Competition Commission (CC) for a detailed investigation.

This follows the OFT market study on extended warranties, which highlights competition concerns in the £1bn a year market that could mean consumers are not getting the best value for money.

The OFT’s market study found that competition remains limited by physical retailers being able to sell extended warranties at the same time as they sell the electrical goods, as well as the fact customers do not have enough relevant information to make an informed decision about whether the extended warranty is value for money.

It also said Pay As You Go (PAYG) warranties can be considerably more expensive than comparable fixed term warranties.

Dixons, Comet and Argos have also agreed to provide more accessible information via in-store leaflets, conduct regular independent mystery shopping exercises and provide clear on-shelf information about the annual equivalent prices of PAYG warranties.

Dixons said in a statement: “The OFT recognises the improvements in the market since the Competition Commission reported in 2003 and in particular that customers are getting better value for money with decreased prices and quality improvements in terms of service and level of cover.

“The OFT believes that the undertakings announced today will resolve any remaining competition concerns.”

It added: “Dixons Retail supports any initiative that provides customers with greater choice and helps them understand the features, benefits and value of the services we are able to provide to them.”

Dixons said it will work closely with the OFT in the development of a price comparison website allowing consumers to compare the cost of these agreements and other similar products.