MPs to discuss compensation issue
ScottishPower declines meeting over warranty claim
A cross-party group of MPs is investigating allegations that the company failed to fulfil a cashback promise made to thousands of customers who bought a warranty through a company called PowerPlan.
The case goes back several years and numerous meetings have been called at Westminster. The next evidence session has been arranged for 3 February but ScottishPower has declined the invitation.
The liquidators, Alan Campbell, the Insolvency Service’s Chief Examiner, the Competition and Markets Authority, Financial Reporting Council (an arm of the FCA), and others have all been called to give evidence and ten MPs are currently confirmed to attend.
The case involves shoppers who bought a PowerPlan warranty on items such as fridges and washing machines and were told they could get the money back after five years if they had not made a claim.
More than 750,000 such warranties were sold between 1998 and 2001, of which about 625,000 did not make a claim and therefore say they were therefore eligible for the “cashback”.
However, by then ScottishPower had divested its chain of electrical retail stores to Powerhouse, which subsequently went into administration.
Two firms which administered and insured the warranties also went bust, and attempts by their administrators to claim money from ScottishPower yielded only £6m of the £75m the claimants say is due.
Business Secretary Sajid Javid last summer took an interest in the dispute in a meeting with Andrew Percy (pictured), chairman of the All Party Parliamentary Group which is investigating the claims.
Mr Percy has written to Neil Clitheroe, chief executive of ScottishPower Generation and Retail, accusing the company of failing to acknowledge its liabilities and of adopting a callous attitude to customers.
He says that documents passed to the MPs’ group reveals that two court appointed liquidators have reached “very concerning conclusions” about the conduct of ScottishPower in its administration of PowerPlan and the cashback promise.
In a response to Mr Clitheroe’s earlier denial of liability in a letter last November, Mr Percy adds that MPs have seen the original promotional material for PowerPlan with its promise of a 100% cashback.
“This material…leaves little doubt in our minds that customers thought they were buying a trusted product from ScottishPower, not anyone else,” he writes.
“It strikes us as strange that Powerhouse would have deliberately bought a scheme, with millions in liabilities, without having had some assurances from ScottishPower that those liabilities were to be covered.
“If you had no legal responsibility for the products why did the vast majority of profits go directly to ScottishPower in the years they operated it [the PowerPlan product]?
“If ScottishPower were not liable for cashback, as you claim, why have since confirmed a £20m ‘accrued expense’ for cashback in your 2003 accounts?”
Mr Percy says the minutes and correspondence cited by the liquidators “points to a callous attitude on the part of ScottishPower.”
Mr Clitheroe, in his letter last November, said the company took the matter “extremely seriously” but it was “subject to threatened court proceedings. Accordingly, it is not appropriate for ScottishPower to comment further.”
He concluded: “Suffice to say that ScottishPower rejects any suggestion of improper conduct and intends to defend strongly any claim made against it.”