Stores face blitz on 'rip-off' warranties

Ministers are poised to launch a clampdown on the sale of "rip-off" extended warranties by high street stores.

Consumers who buy new electrical items are encouraged to purchase the policies to "insure" products. But the policies often cost up to half of the value of the electrical item.

The Competition Commission will today present its recommendations following an extensive investigation into Britain's £800 million-ayear extended warranty market. The DTI is expected to decide before Christmas how to stop the practice.

Shops could be forced to stop pressure-selling the policies. They may also be told to make it clear if items are already covered by the manufacturer's guarantee.

New rules would spell disaster for electrical giants. It is thought that up to 47 per cent of pre-tax profits of firms such as Dixons come from the warranties.