A ScottishPower warranty scheme that allegedly failed to pay out £75 million to customers “was a fraud to the public”.
That’s according to a group of MPs who joined forces to investigate the alleged mis-selling scandal “that has lasted for more than a decade”.
In a highly damning report, 28 MPs on the All-Party Parliamentary Group (APPG) claim the warranty scheme, which was sold to 625,000 people across the UK, was “neither financially capable of functioning nor designed to deliver”.
The report states ScottishPower used to have retail stores that sold TVs, fridges, washing machines, etc in the late 1990s and early 2000s. They sold cashback warranties, meaning if customers didn’t claim their warranty within five years, they’d give the cash deposit back.
These warranties were called ‘PowerPlan’ and a sub-company PowerPlan Company Ltd (PPCL) was set up to issue them.
In 2001, ScottishPower sold their stores to another retailer, Powerhouse, on the provision the already existing claims would be covered by the energy firm.
However in 2004/05, Powerhouse went bust and the report alleges 625,000 people never got their money back, “meaning over £75 million is still owed”.
The cross-party group accuses the Big Six energy company, claiming it “not only sustained the scandal for years but sought subsequently to cover it up”.
The MPs are now calling for a formal Select Committee hearing into the scandal “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 affected consumers.
Andrew Percy MP, Chair of the APPG said: “Over the past year this group has been compiling evidence from many sources, including liquidators, regulators, former customers and employees on how this came to pass; much of that evidence made detailed allegations of fraud, criminality and more.
“Therefore, 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.”
ScottishPower said it is “extremely disappointed” by the content of the report.
A spokesperson added: “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 ScottishPower or its advisors
“As we have said over a period of years, ScottishPower 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 ScottishPower does not propose to comment further.”