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Wednesday, 3 October, 2001, 11:09 GMT 12:09 UK
Watchdogs probe electrical stores
Warranty graphic
Trade watchdogs are to investigate warranty deals offered by electrical stores, over concerns of expense and high-pressure sales methods.

The Office of Fair Trading (OFT) said the probe, one of three unveiled on Wednesday, followed an initial inquiry which found that retailers were breaching guidelines set down in a code of practice.

OFT investigators posing as shoppers found sections of the code, covering factors such as the display of warranty details, were being broken by up to three quarters of stores.

The OFT also on Wednesday launched an investigation into pharmacy regulations, and into "several areas of concern" in the IT services market.

'Wide ranging'

The "wide-ranging" probe into warranties will examine a market which has grown from 650m in 1994 to more than 1bn today.

Warranties sold by electrical stores allow buyers of goods such as fridges and PCs extended repair, or replacement, cover should their purchase break down.

To retailers, warranties, on which margins are relatively high, have represented a goldmine at a time when stiff competition has kept down the price of the goods themselves.

The OFT said it would assess competition in the market, the value-for-money customers receive, and whether salespeople were using high-pressure techniques.

IT services probe

In the IT services market, the OFT said it would investigate the "complex" range of products on offer.

"Buying a PC, printer and software is just the start," the office said.

Areas of concern include contract terms, the availability of information for comparing deals, and the provision of support services, such as helplines.

"The better that [the markets] operate, the greater will be the potential for people to realise the benefits of new technology in the home," Wednesday's statement said.

In the pharmacy probe, the OFT said it would examine regulations which allow local health authorities powers over where drug stores can open.

"It is important for customers that a convenient service is available," the OFT said.

'Probing examinations'

The launch of the studies follows an OFT revamp which has spawned the office's markets and policy initiatives unit.

"Today marks an important step forward in the OFT's work," said John Vickers, director general of fair trading.

"The new division will undertake probing examinations of markets, practices and regulation to explore whether the needs of customers are being well served."

He stressed that the probes announced on Wednesday were "exploratory studies, not inquisitions".

The BBC's Nicola Carslaw
"Shoppers often feel they are being conned"
See also:

20 Jun 01 | Business
Clampdown on price fixers unveiled
13 Mar 01 | Business
Half of online stores 'break law'
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