Dixons hit by warranty worries

SHARES in Dixons, Britain's biggest seller of electrical goods, dived more than 5% today after the Competition Commission unveiled a plan to stop retailers bullying consumers into buying extended warranties.

The watchdog, led by Sir Derek Morris, put forward two possible packages of 'remedies' aimed at giving consumers better information about the repair policies, such as their price and duration.

It also wants to give shoppers time to reflect, away from the pressure of the store, on whether the warranty being offered is really what they need and good value. Consumers would be entitled to a full refund if cancelling within 60 days.

In an attempt to break up the 'complex monopoly' on the sale of the policies, the commission also proposes giving more time for alternative providers of extended warranties to get their offer on the table, so consumers are given a wider choice.

The commission will publish its final report on 30 September after getting feedback from stores. The report was ordered by the Office of Fair Trading (OFT), led by John Vickers, after complaints that such warranties are expensive and often unnecessary.

Firms such as Comet and Dixons Group, which includes Currys, PC World and The Link, make millions from them, often encouraging staff to hard-sell the policies by paying commissions linked to sales.

Dixons was the heaviest FTSE 100 faller in early trading today, tumbling 6 3/4p to 127p.