UK “satellite warranty” loses appeal
The UK Supreme Court unanimously dismissed appeals by Digital Satellite Warranty Cover (DSWC) and Bernard Freeman and Michael Sullivan, trading as Satellite Services in a case which revolved around the so-called extended warranties offered by the businesses on Sky TV set-top boxes.
The Financial Services Authority (FSA) issued winding up orders on the companies back in January 2011 on the basis that the ‘warranties’ being offered amounted to contracts of insurance which needed FSA authorisation.
The warranties on offer cost users between £6.49 and £11.49 a month and, said court papers, helped generate £10 million in profits during 2011 for DSWC, and another £2.1 million for Satellite Services.
An important feature of the cover was that neither DSWC nor Satellite were required to pay their customers money – the cover involved the repair or replacement of the equipment in the event of breakdown, malfunction or physical damage.
Tracey McDermott, director of enforcement and financial crime at the FSA, said: “The judgment will help protect consumers from inadvertently dealing with unauthorised businesses that offer similar cover. The Supreme Court’s decision will be of interest to other firms that offer warranties, helping them understand when they should speak to us about getting authorised.”
BskyB stepped in and provided free cover for those affected by the liquidated companies. PricewaterhouseCooper were appointed liquidators in November 2010 and negotiated with BSkyB whereby BSkyB, at their cost, provided affected customers with full insurance back up at the time.