The Office of Fair Trading (OFT) has launched a study into extended warranties, looking at whether they’re good value for money and the competition in the market.
It is widely thought that, in most cases, extended warranties aren’t worth buying.
When buying a washing machine, fridge freezer or dishwasher etc. customers may be sold extended warranties to provide extra cover for the product after any manufacturer warranty period.
Which? money editor James Daley said: ‘In most cases, extended warranties are just a waste of money. Electrical goods and most domestic appliances are pretty reliable these days; but if a product does develop a fault, you may be able to claim a repair or replacement from the retailer even without a warranty.’
It is also worth noting that the average cost to repair a large electrical appliance by our approved engineers is approximately £75, which is a lot less than most insurance policies cost, even the new policies that the OFT is also looking at that have been dubbed PAy As You Go (PAYG) policies where you are offered a service plan for a few pounds per month. The trouble with that is that it does mount up and will often end up costing much, much more than a repair would have.
The Sale of Goods Act will often provide you with necessary protection should something go wrong with your item. If a product breaks down, consumers may have a legal right to repair or replacement. However this can be onerous to actually get anywhere with and often in the meantime you have a broken appliance that requires repair.
The extended warranties market is worth over £750million.
The OFT’s director of consumer and goods group Claudia Berg said: ‘Consumers buy millions of extended warranties on domestic electrical goods each year and we want to make sure they are getting value for money.’
The results of the study are due to be published in the summer.
The OFT were also looking at the cost of repairs and any possible restrictions in the market that affects appliance repairs.
They OFT has concluded that they, for the time being, have failed to discover sufficient evidence to support an investigation much further than they have done already but that they have said that this is “for the current time” so a further look has not yet been ruled out and comments on the matter have been invited. The actual text from the report is:
You can contact the OFT on the subject of aftermarket repair restrictions, such as the unavailability of technical information and or diagnostics tools on a dedicated email which is, degs@oft.gsi.gov.uk