DTI targets extended warranty sharks

The government has unveiled a scheme to provide better protection for consumers taking out extended warranties on domestic electrical goods.

The Department of Trade and Industry (DTI) plans, due to come into force in April, aim to improve clarity and information for consumers considering buying an extended warranty.

The proposals were first published by the DTI in July 2004 following a report by the Competition Commission which found that consumers are often being put under pressure to sign up to an extended warranty at point of sale.

Under the terms of the guidelines retailers must show the price of the extended warranty alongside electrical goods in shops, catalogues, websites and print adverts.

Electrical retailers must also provide information about statutory rights, cancellation rights and details of the warranty, including whether or not it provides financial protection in the event of insolvency and whether it terminates in the event of a claim.

As a cooling off safeguard the DTI scheme forces retailers to 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.

In a bid to prevent hard selling of warranties when goods are first purchased, the rules state that the extended warranty must be offered on the same terms for 30 days after purchase.

Consumer Minister Gerry Sutcliffe said: "From April consumers will be in a much better position to make an informed choice about whether or not to take out an extended warranty when buying an electrical product.

"Our proposals have been largely welcomed by business and consumers. We are ensuring that businesses are given a full 12 weeks to prepare for implementation of the measures."

The order will come into force on 6 April in line with the government's policy on a common commencement date for all new legislation.

This will allow a standard 12-week period for businesses to make the necessary changes.