Government steps to improve extended warranty market fall short of providing adequate consumer protection says the ABI

The Government’s decision to exclude extended warranties from FSA regulation represents a missed opportunity to improve consumer protection according to the ABI (Association of British Insurers).

Today’s Government statement sets out a package of measures to assist consumers in buying an extended warranty. It follows the publication of the Competition Commission’s report into the extended warranty sector.

The ABI supports measures to increase choice and provide information to enable consumers to make informed extended warranty purchases. However, the Government’s decision not to bring extended warranties under FSA regulation creates uneven protection for consumers.

Chris Hannant, the ABI’s Head of Market Regulation and Specialist Lines, said:

“ This decision falls short of giving customers the reassurance they need. Exempting insured warranties from FSA regulation is inconsistent with the approach for other general insurance products. Exempting service backed warranties means that customers will not have statutory protection against company insolvency or recourse to the Financial Ombudsman. This ‘ two tier ‘ approach is not in the interests of consumers. “

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Note for Editors

1. Enquiries to:

        Malcolm Tarling  020 7216 7410 (Mobile: 07776 147667
        Alan Leaman  020 7216 7440 (Mobile: 07957 482330)
  Emma Quantrill  020 7216 7392 (Mobile: 07712 841183)
 Lucy Butler  020 7216 7411 (Mobile: 07712 841184)

2. The ABI is the trade association for Britain’s insurance industry. Its more than 400 member companies provide over 94% of the insurance business in the UK. It represents insurance companies to the Government, and to the regulatory and other agencies, and is an influential voice on public policy and financial services issues. ABI member companies hold more than a fifth of all investments traded on the London Stock Exchange, on behalf of millions of pensioners and savers.

3. An ISDN line is available for broadcasts. 

Copies of all ABI news releases, together with other information from the Association, can be seen on our website http://www.abi.org.uk

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