The Supply of Extended Warranties on Domestic Electrical Goods Order 2005

Explanatory Note

(This note is not part of the Order)

This Order imposes an obligation on suppliers of domestic electrical goods, who also supply extended warranties for those goods, to provide certain information to the consumer before the sale of an extended warranty. It also provides consumers who purchase such extended warranties with certain cancellation and termination rights.

Article 2 provides that the cancellation and termination rights specified in Article 8 of the Order do not apply in relation to extended warranties that are distance contracts to which the Directive 2002/65/EC concerning the distance marketing of consumer financial services applies.

Article 3 imposes an obligation on in store suppliers to display the price and duration of an applicable extended warranty whenever the price of a domestic electrical good to which that extended warranty relates is displayed in store (other than on a stock checker device or automated self-service machine), in a manner that is clear and legible, and makes clear the purchase of the extended warranty is optional.

Article 3 also imposes an obligation on in store suppliers to provide the consumer with further relevant information including information about the consumer’s cancellation and termination rights under the Order and the fact that an extended warranty need not be purchased at the same time as the domestic electrical good. It imposes an obligation on in store suppliers to provide leaflets containing this information and, except where the value of the extended warranty is £20 or under or where the extended warranty is purchased through an automated self-service machine, an obligation to provide a written quotation for an extended warranty on request and in any case before the purchase of an extended warranty, so long as that request or purchase is made at the same time or immediately subsequent to the sale of the domestic electrical good to which it relates.

Articles 4 to 6 impose obligations in relation to advertising/publishing the price and duration of an extended warranty where the price of a domestic electrical good is advertised in a newspaper advertisement, promotional publications and posters (unless the supplier has sold less than £10,000 of extended warranties in the previous business year); published in a catalogue or published on the supplier’s website.

Article 7 makes it unlawful for a supplier who has provided a written quotation pursuant to article 3 to supply an extended warranty specified in the quotation unless the price quoted and any discounts or incentives tied to the purchase of the extended warranty are available for at least 30 calendar days and the consumer has acknowledged in writing the receipt of the written quotation before purchase of the extended warranty.

Article 8 imposes an obligation on the supplier to provide a consumer with the right to cancel an extended warranty within the period of 45 calendar days and receive a full refund (so long as no claim is made) and the right to terminate the extended warranty at any time after the cancellation period and receive a pro rata refund. Where the price of the extended warranty exceeds £20, the article imposes an obligation on the supplier to inform the consumer of his cancellation/termination rights in writing at least 20 calendar days before the end of the cancellation period.

Article 9 obliges a supplier, or the person who has the contract with the consumer (who may not be the supplier) to provide the Office of Fair Trading with information that they hold which is necessary for monitoring compliance with this Order.

Article 10 enables the Secretary of State to give directions in the event of non-compliance with the Order.

Copies of the report of the Competition Commission which led to the making of this Order (Cm. 6089) may be obtained from The Stationery Office Limited.

A full regulatory impact assessment of the effect that this instrument will have on the costs of business is available from the Consumer and Competition Policy Directorate, 1 Victoria Street, London SW1H OET. A copy can also be found at www.dti.gov.uk/ccp/topics2/pdf2/ewria.pdf.