Appellate Court Dismisses Plea by Satellite Services Firms

Jack Humphrey, Regulatory journalist
December 12, 2011 /

The Court of Appeal has upheld a high court decision winding up firms offering satellite warranties, following an intervention by the Financial Services Authority, and dismissed appeals by Digital Satellite Warranty Cover Limited (DSWC), and Bernard Freeman and Michael Sullivan, trading as Satellite Services.

The FSA previously secured winding up orders from the High Court against DSWC and Satellite on 31 January 2011, which both firms appealed. The appeal was heard in July 2011; the Court of Appeal’s decision was unanimous.

DSWC and Satellite, both based in Kirkby, Liverpool, provided cover for Sky satellite TV equipment in return for an insurance premium. All parts and labour costs were covered for between £6.49 and £11.49 per month.

The cover offered by the firms was described as an ‘extended warranty’; however, the High Court ruled on 31 January 2011 that the cover amounted to a contract of insurance. Arranging or providing insurance is a regulated activity, so both firms needed to be authorised by the FSA.

Concerned that these firms might be carrying out unauthorised business the FSA asked the High Court to wind up both firms – to which it agreed. A third unauthorised firm, Nationwide Digital Satellite Warranty Services Limited (NDSWS) – again based in Kirkby, Liverpool – was also wound up in January 2011 but did not appeal the High Court’s decision.

Dan Yoram Schwarzmann and Toby Scott Underwood of PricewaterhouseCoopers (PwC) have been appointed joint liquidators of the firms. Customers with any queries about the next steps in the insolvency process should contact PwC.

Tracey McDermott, the FSA’s acting director of enforcement and financial crime, said: “We’re pleased that the Court of Appeal has upheld the High Court’s decision to wind up these firms. This decision will help protect satellite TV customers from inadvertently dealing with an unauthorised business, but also serves as a useful reminder to other firms that offer similar cover that they may need to seek authorisation.

“Indeed, we are aware of other firms who offer similar insurance products to DSWC, Satellite and NDSWS – but not just satellite equipment. We are also seeing cover for white goods, home entertainment equipment, electricity, plumbing and boiler problems.

“Some of these firms have quite rightly taken steps to become authorised, but consumers should take a moment to consider who they are dealing with and whether or not that firm needs to be FSA authorised.”

The appellants now have 28 days to seek permission from the Supreme Court of the United Kingdom to appeal the decision.


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