The £900 million-a-year market in extended warranties on household electrical goods was one of the first to be investigated by a new division within the Office of Fair Trading.
The section's role was to determine whether markets, practices and regulation were meeting customers' needs.
The verdict delivered by John Vickers, director general of fair trading, was clear.
"There are serious questions about how effectively competition in this market is working," said Mr Vickers in July last year, when he announced he was referring the market to the Competition Commission.
Warranties are sold on the basis that they offer peace of mind but critics claim most are over-priced and under-used.
The warranties market is dominated by the Dixons Group, which includes the Dixons, Currys and PC World chains. The Group sells almost 25% of policies on household electrical products, according to a report from the Competition Commission.
Analysts estimate up to 47% of Dixons' pre-tax profits come from the sale of warranties while for rival Comet they could be worth as much as 80%.
The Consumers' Association, which has led criticism of extended warranties on electrical goods, says a five-year policy typically costs between a third and a half the cost of the product it covers.
According to the OFT's report from last year, a five-year warranty from Dixons or Currys will add £139 to the price of a washing machine on sale for £225 or less, while the same policy on a £280 washer dryer costs £169.
The Consumers' Association say electrical products are also more reliable than ever.
An investigation by its magazine Which? found just a 15% chance of a washer-dryer breaking down in the first three years of a policy and 25% within five years.
The likelihood of a customer claiming is even lower on televisions, DVD players and video recorders.
Which? said there was a 6% probability of someone with an extended warranty on a standard TV claiming in the first three years, rising to 9% within five years.
Consumers with a problem are also urged to consider their rights under the Sale of Goods Act and to check their household contents insurance which often covers theft and accidental damage.
Retailers, led by the Dixons Group, say most warranties offer far more than a simple repair.
Customers can call helplines which offer advice on products such as PCs which can present difficulties in setting-up and operating.
The companies also reject claims that staff use hard sell tactics to get customers to take out a policy because they have targets to meet.
From The Scotsman