FSA takes firms to court

Digital Satellite Warranty Cover Limited (DSWC), Satellite Services (Satellite), a partnership, and Nationwide Digital Satellite Warranty Services Limited (Nationwide Digital) were operated by Bernard Freeman and Michael Sullivan, and offered BSkyB’s (Sky) satellite TV customers a form of extended warranty which constituted insurance.

In return for an insurance premium of between £6.49 and £11.49 per month, these firms promised customers unlimited callouts covering all parts and labour costs. DSWC made a profit of approximately £10 million in the last 12 months and had a customer base of up to 200,000 people.

When it investigated Satellite’s accounts the FSA found that turnover reached £2.1 million in 2010. As part of this action the FSA is seeking to wind up DSWC, Satellite and Nationwide Digital.

The FSA said it believed the products described as warranties by the firms amounted to contracts of insurance and arranging and effecting contracts of insurance is a regulated activity. None of the firms have ever been authorised by the FSA.

With the support of both the provisional liquidators and the FSA, and as sanctioned by the High Court, Sky has recently written to all customers who had a warranty with DSWC, Nationwide Digital or Satellite to confirm that it will provide free support to any affected customer who needs a repair or service visit.