DIXONS yesterday lined up a series of executives and store managers to argue its case that extended warranties are in the public interest.

John Clare, the chief executive, said: “The debate around extended warranties has become stuck in a time warp. The concept that we will repair it if it breaks down is outdated.”

He explained: “That feature is assuming less and less importance over time. Telephone diagnostics and dealing with non-technical faults — for example, where a customer has spilt tea over their computer or has plugged the wrong wire in the back of their new video — mean that the benefits our plan provides from the day of purchase are not just an extention of the manufacturer’s guarantee.”

Mr Clare said that, as products became more technical, working out why they were not operating properly was increasingly difficult for customers. He argued that customer support would become more important with technological advances, when fridges, for example, were connected to the internet and when it was possible to find out via your mobile phone who was ringing your front doorbell while you were on holiday.

“The chances of a technical fault may be reducing, but in the complex technological world there is a growing need for customers to keep their interactive products operating.”

Mr Clare said customers bought Dixons’ Coverplan scheme to give themselves peace of mind and it was not in the group’s interest to pressurise customers into buying something they did not want or value.

“We are in the in the long-term loyalty business,” Mr Clare said.

He indicated that the Competition Commission had been investigating the possibility of forcing retailers to split out extended warranties as a defined product limited to repair and replacement and to sell additional services separately.

This was not a viable option because comprehensive customer support was an important part of the package that gave Dixons a competitive advantage in the electrical retail market.

More than half the call-outs attended by Dixons’ engineers proved to be customers’ difficulties with operating machinery or attaching it to their existing products, rather than technical faults.

Mr Clare said that, for this reason, comparing the cost of the insurance with the price of repairing an item was too simplistic.

He denied that Dixons made exceptional profits from the sale of extended warranties and said the retailer’s return on sales was 6p per pound, in line with other high street retailers such as Marks & Spencer, which makes 8p per pound.