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By | Lucy Sherriff 19th November 2004 14:34

Gov delays new extended warranty rules

One more Xmas of rip-offs

The government's new rules on extended warranties will not become law before Christmas this year. The new rules call for retailers to give consumers better information about the warranty products, but retailers warned the changes had been brought in too fast.

The Department of Trade and Industry (DTI) published plans for the reform of the extended warranties market in July this year. It said that although many retailers had implemented the changes as proposed in July this year, other businesses asked for the necessary legislation to be delayed until after Christmas.

Consumer Minister Gerry Sutcliffe said: "While it is important to protect consumers, we have no desire to place unnecessary burdens on retailers, especially as many already have the proposed changes in place, which is why we have decided to delay implementation until next year."

Consumer groups have argued for a long time that the insurance policies sold by electronics retailers are too expensive. The UK's competition commission also notes that because there is no competition, retailers often charge excessive amounts for the products. An extended warranty can cost as much as a third of the value of the product, and analysts reckon roughly a quarter of Dixons' profits and half of Comet's earnings come from warranty sales.

The day before the government announced the revised timeline, Dixons warned that its Christmas trading would not be as buoyant as usual. John Clare, Dixons chief executive, said that the rate of sales growth has slowed: "We are cautious about the outlook for consumer expenditure on high-ticket discretionary purchases across the balance of the year, particularly in the UK."

Other government concessions made to the retail industry are detailed here, and the full consultation document is available here

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