Scotland business

Scottish Power warranty 'was a fraud' say MPs

ScottishPower logo Image copyright ScottishPower

A Scottish Power warranty scheme that allegedly failed to pay out £75m to hundreds of thousands of customers was "effectively a fraud on the public", according to a report by MPs.

The offer sold to 625,000 people across the UK was "neither financially capable of functioning, nor designed to deliver", the cross-party group said.

Customers who bought white goods up to the early 2000s were promised a refund if they didn't claim within five years.

Scottish Power denies any wrongdoing.

The All-Party Parliamentary Group (APPG) heard evidence from liquidators, regulators, former customers and employees regarding the warranties sold under the PowerPlan scheme through the energy firm's chain of 150 high street stores.

Many customers were left without refunds after the stores and ScottishPower's insurance arm, Domestic Appliance Insurance Limited, were sold to Powerhouse, which subsequently went into administration.

The MPs are now calling for a formal Select Committee hearing "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".

'Held accountable'

The APPG chairman Andrew Percy said: "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.

"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.

"Indeed, we do not believe it was in Scottish Power'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."

'No improper conduct'

A Scottish Power spokesman said: "We are extremely disappointed by the content of this report.

"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.

"This matter has been the subject of a number of reviews which have found no evidence of improper conduct on the part of Scottish Power or its advisers.

"As we have said over a period of years, Scottish Power emphatically rejects any suggestion of wrongdoing in relation to the PowerPlan scheme.

"In addition, this matter is the subject of threatened proceedings and in those circumstances Scottish Power does not propose to comment further."