MPs slam ScottishPower warranty ‘fraud’

A warranty scheme run by ScottishPower has been called a “fraud on the public” after it failed to pay out £75 million to customers.

MPs from the All-Party Parliamentary Group (APPG) into the mis-selling scandal over warranties on white goods sold by the company in the late 1990s and early 2000s heard evidence about the scheme from regulators, former customers and liquidators.

The warranty scheme was sold to 625,000 people in the UK, a significant number of whom were pensioners and was “neither financially capable of functioning nor designed to deliver”, according the cross-party group.

Customers were promised refunds if no claims were made within five years but many missed out after the company’s insurance arm, Domestic Appliance Insurance Limited, was acquired by Powerhouse – which subsequently went into administration.

ScottishPower, which was taken over by Spanish company Iberdrola, argued the claims are legally and factually flawed.

MPs, however, are calling for a committee hearing in the House of Commons “so that ScottishPower executives can be called to account for their actions before Parliament, opening the way to achieving some form of justice, including compensation, for those consumers who are affected”.

Andrew Percy MP, chair of the APPG, said: “Over the past year this group has been compiling evidence from many sources, including liquidators, regulators, former customers and employees on how this came to pass. Much of that evidence made detailed allegations of fraud, criminality and more.

“Therefore, we have been shocked by the complete lack of uptake by regulators and authorities to date and I expect this report to make them sit up and take notice.”

He added: “There is no doubt in our mind that selling a cashback promise that was neither financially capable of functioning nor designed to deliver is effectively a fraud on the public; and they have been covering it up ever since.”

He also said: “Indeed, we do not believe it was in ScottishPower’s gift to sell on that promise - which was to their customers - to another retailer in the first place.

“It is high time they were held accountable and I look forward to taking this report to our meeting with consumer minister Nick Boles next week. I am sure he will agree with our assessment.”

A spokesman for ScottishPower said the company was “extremely disappointed” by the report.

He added: “For a period of months, we have responded in detail to a series of allegations that are both factually and legally flawed.

“The company is concerned that the findings of the APPG are not only demonstrably wrong but ignore evidence put to the group in writing and some very basic legal principles.”