OFT criticizes insufficient competition in the market for extended warranties

Yesterday, the British Office of Fair Trading (OFT) published the results of a market study on extended warranties in the market for electricity goods. The study highlights that despite some improvements in the 1 billion Pound market several competition concerns remain. 

The study shows in particular:

  • Competition remains limited by the retailers' 'point of sale' advantage in being able to sell extended warranties at the same time as they sell the electrical goods.
  • Only around a quarter of consumers shop around for extended warranties, which remains low compared to many other insurance products.
  • When buying an extended warranty at the same time as an electrical good, shoppers do not have enough relevant information to make an informed decision about whether the extended warranty is value for money.

To address these concerns, the largest retail providers of extended warranties, Dixons, Comet and Argos have agreed to: 

  • Establish, maintain and publicise an extended warranties comparison website, to make shopping around easier.
  • Provide more accessible information via in-store leaflets, including on the availability of alternative providers.
  • Conduct regular independent mystery shopping exercises to help ensure shoppers get accurate information from sales staff - and report back to the OFT on the results.

Ann Pope, Director in the OFT’s Goods and Consumer Group, argued: “Millions of extended warranties are sold in the UK each year and we remain concerned that, despite recent improvements, this market does not work as well as it could for consumers. We welcome the retailers' initiative in offering undertakings and we now want to hear from consumers and others whether they think these will lead to improvements.“


Further information: and

Source: OFT