Furious customers who bought electrical goods from the former ScottishPower retail chain besieged the liquidators of failed warranty firm PowerPlan last week after all repairs were suspended.
Customers with so-called cashback policies were also angry when they were told that these promises will not be kept, as there was no money to refund the premiums to those who did not make a repair claim as was pledged at the outset.
They are likely to be further aggrieved by PowerPlan’s statement that the sums set aside to pay refunds on these contracts had been “woefully inadequate”.
A spokesman for PowerPlan said: “When these policies were set up the insurers under-estimated by a very large margin how many people would demand a refund because they had not made a claim under the policy.
“At the time it was thought most customers would simply forget. But the world has changed. With electronic personal organisers and so forth, people have not forgotten the original promise as was expected.”
But ScottishPower has strongly denied the claim. A spokesman said: “At the time of sale of ScottishPower’s retail business to PowerHouse, PPCL had access to more than adequate funds to cover the level of expected claims.”
The MacDonald Partnership, which is acting as administrators for the failed warranty firm has been inundated with calls from angry customers whose electrical appliances have broken down and cannot now be repaired under the terms of the warranties they bought, often for up to £300.
PowerPlan, which was originally established in 1998 as a “special purpose company”, was designed to provide repairs to customers of ScottishPower’s electrical shops. The contracts were backed by two separate insurance companies, also ScottishPower-owned; one providing the cashback arrangements and another underwriting the repairs.
These businesses were sold to PowerHouse, Britain’s third biggest electrical retailer in October 2001, although the insurance company underwriting repairs was hived off separately.
It is believed there are funds in this company to meet part of future repair bills, and administrators are attempting to broker a deal that would allow customers to receive a “capped” contribution to future repair bills.
But the company under-writing the cashback promise went down along with PowerHouse which was rescued last week by New Zealand retailer Pacific Retail Group.
>From The Sunday Herald