Insurance and warranty schemes

Find out how insurance and warranty schemes work, how to tell if it is a scam and what to do if you are scammed.

If you buy or already own a product like a mobile phone, satellite TV equipment or home appliance you might consider insuring it in case it is damaged or lost. This sort of insurance should cover you for the repair or replacement of the product, with parts and labour costs often included.

But we have received reports that some fraudulent firms are taking payments from customers but not arranging the insurance cover as agreed. This could leave you with little or none of the protection you think you have.

We have also found that some companies have been contacting people to sell, promote or advise on insurance without our authorisation.

This is important because if you deal with an unauthorised firm you will not have the right to make a complaint to the Financial Ombudsman Service or have access to the Financial Services Compensation Scheme (FSCS) if things go wrong, such as where insurance is not arranged as you expected or the insurer goes bust.

How insurance and warranty schemes works

You may be cold-called with an offer of insurance for an item like a mobile phone, satellite equipment for your TV set (this may also be called a ‘satellite box’ or ‘digital box’) or home appliances. The call will usually come soon after you purchase the product or take out a contract for a related service, though existing customers may also be approached.

The caller may also claim they are linked to the store or company you bought the product from, or the mobile phone of satellite TV provider. However, it is highly unlikely an unauthorised firm will have anything to do with the mobile phone of satellite TV provider.

The cover is often described as a ‘warranty’ but will actually be an insurance contract. Arranging and providing insurance contracts is a regulated activity, which means the company offering it to you must be authorised by us.

Whether they are arranging cover that will not meet your expectations or are blatantly trying to scam you out of your money, you may only find out you do not have the insurance you agreed to when a claim is rejected.

Protect yourself

Remember: if it sounds too good to be true, it probably is!

We strongly advise you to only deal with financial services firms that are authorised by us, and check the Register to ensure they are.

To verify the identity of an authorised firm ask for their ‘firm reference number’ (FRN) and contact details, but always call them back on the switchboard number given on our Register. If there are no contact details on our Register or the firm claims they are out of date, contact our Consumer Helpline on 0800 111 6768.

You can also search our list of unauthorised firms to avoid doing business with, although their names are likely to change regularly. We add new names to this list as soon as possible, but if the firm which has approached you does not appear on our list, do not assume it is legitimate – it may not have been reported to us yet.

You should check the details on your insurance policy to ensure they are correct.

There are more steps you can take to protect yourself from unauthorised firms.

If you have been scammed

You can report an unauthorised insurance firm or broker by submitting our form or contacting our Consumer Helpline on 0800 111 6768. Please provide as much information as you can about the company involved, including their contact details and FRN.

The more information we have, the better our chances of assessing whether the firm should be authorised by us and taking further action.

We are working together with Trading Standards to combat unauthorised firms involved in schemes selling, promoting or advising insurance, so you can also contact your local Trading Standards to make a complaint.