The Department of Trade and Industry (DTI) is to consult on reforms to the extended warranty market in the UK.
It said it was seeking the views of businesses and consumers on draft legislation to reform the way retailers sell extended warranties for domestic electrical goods.
A report by the Competition Commission in December 2003 found that the extended warranty market was not working as well as it should, with consumers often being put under pressure to sign up to an extended warranty at point of sale.
The DTI's consultation document proposes that in future retailers will have to:
· show the price of the extended warranty alongside electrical goods, in store and in adverts;
· give consumers information about statutory rights, cancellation rights and details of the warranty;
· give consumers 45 days to cancel their extended warranty, including a written reminder of this right and the right to cancel at any time and receive a pro-rata refund;
· offer the extended warranty on the same terms for 30 days if the consumer chooses not to buy it there and then. Any discounts tied to the purchase of the extended warranty would also be available for 30 days; and
· inform customers about whether or not their warranty provides financial protection in the event of insolvency.
Consumer Minister Gerry Suttcliffe said: “Our position is clear: the market in extended warranties is not working for the benefit of consumers, and change is necessary.
“The consultation document seeks views on a draft Statutory Instrument which helps redress the balance in favour of the consumer. We are, of course, open to ideas if interested parties think this SI can be improved upon.
“Recognising the importance of the Christmas shopping period for warranty sales, we intend to introduce the necessary changes by the end of November.”
The consultation closes on 22nd October 2004.
The public consultation document is available from the DTI press office or can be found at: www.competition-commission.org.uk/rep_pub/reports/2003/485xwars.htm#summary
