Buy now - but don't claim for a refund later

Scottish Power may still pay out for its extended 'cashback' guarantees, says Paul Gosling

Three quarters of a million consumers who feared they had lost out on promised warranty cashbacks when the former Powerhouse electrical retailer collapsed last year may be partially reimbursed, The Independent has learnt.

Three quarters of a million consumers who feared they had lost out on promised warranty cashbacks when the former Powerhouse electrical retailer collapsed last year may be partially reimbursed, The Independent has learnt.

A meeting of creditors of PowerPlan, the company which issued the warranties, has been set for Glasgow on 23 November, leading to speculation that Scottish Power - which sold many of the warranties through its former high street stores and has its headquarters in Glasgow - will be embarrassed into making a no liability admitted settlement with the administrators. A source close to negotiations said a group of creditors was considering lodging a series of small claims court applications against Scottish Power, which could damage its reputation. It is understood administrators are now optimistic of extracting a settlement from Scottish Power.

Customers of both the former Powerhouse and Scottish Power store chains who hold warranties on electrical goods became creditors to PowerPlan. Powerhouse was Britain's third largest electrical retailer, having bought the stores previously run by the privatised Scottish Power. The New Powerhouse stores, which continue to trade, were purchased by the Pacific Retail Group, which has no responsibility for prior debts.

Scottish Power and Powerhouse actively sold extended warranties, backed by the promise of a full "cashback" at the end of the period if they were not drawn on. But with the collapse of PowerPlan it had seemed as if people holding the cashbacks, typically worth hundreds of pounds, would simply lose out as a result of the collapse of the companies.

But in response to questions from The Independent, a spokesman for The MacDonald Partnership, insolvency practitioners administering PowerPlan, said that negotiations were "currently taking place" which the firm "believes will maximise creditors' interests". Because of this the firm had been advised by its solicitors to make no comment.

One of those given fresh hope by this news is Brian Mathieson of Hamilton in Scotland, who was unhappy that he is out of pocket. "Against normal practice, I was persuaded to buy the extended five-year guarantees, on the basis that, if there were no claims and certain registration terms were followed, the original fee paid would be refunded," Mr Mathieson recalls.

"Early last year, the first one paid out in full. However, it would appear that the insurance company underwriting this cashback offer has now folded and, despite complying with all requirements, I had no reply to my two most recent claims."

In 1998 Mr Mathieson paid £548 for a fridge/freezer and in 1999 £270 to buy a tumble drier, for which he paid £185 for extended warranties which were not called upon and which are due for complete refunds. "It may be that Scottish Power sold off its retail outlets some time ago, but if the insurer they subcontracted this arrangement to has gone belly-up, then surely the parent company has some liability," he said.

Not so, points out Simon McMillan, a spokesman for Scottish Power. "PowerPlan warranties were sold by PowerPlan Company Ltd (PPCL) through Scottish Power as an agent - normal practice in the retail sector," he explained. Scottish Power says it had no ownership interests in PowerPlan and argues it has no legal or moral responsibility to assist in recompensing customers, despite reports they were paid 35 per cent commission on the sale of the warranties. Mr McMillan added: "Any enquiries should be directed to the administrator of PPCL who has funding available for certain qualifying claims."

Mr Mathieson can now wait with some hope of getting some money back. Several credit card issuers have accepted that under the terms of the Consumer Credit Act they have responsibility for recompensing customers for the cashback deals that became duds and have repaid their customers with the cost of the warranties. But Mr Mathieson used interest free credit deals offered by the retailer which gave him inferior consumer rights.

Customers holding PowerPlan warranties who wish to make claims for repair costs should contact the MacDonald Partnership on 0870 160 2324.