The Office of Fair Trading looks to have - at least for the time being - reached a compromise with retailers over the vexed issue of extended warranties.

These insurance products, typically sold alongside electrical goods and promising "peace of mind" if the goods break down when the manufacturers' guarantee expires, are notoriously bad value. They are expensive, riddled with get-out clauses, often give the same cover that the law supplies free of charge when goods turn out to be faulty, and only cover part of the cost of a repair, such as parts, leaving the customer to pick up the more expensive part of the bill, such as labour.

Instead of cracking down hard on the sale of these policies in shops, the OFT has "welcomed" proposals from retailers to improve the terms of the warranties and launch a prce comparison website to enable consumers to evaluate the merits of different policies.

The OFT keeps coming back to the issue of extended warranties and has already extracted from retailers a concession that they inform consumers that the purchase of the extra is not compulsory, and if they want extra cover they should shop around and compare terms from rival insurers.

The fact of the matter is that most people can't be bothered to shop around. The OFT found that only a quarter of shoppers look around for their extended warranty. Making the product available at point of sale makes it easy to purchase, and even if a retailer says the product is optional, a little nod and a wink makes a gullible customer believe purchase is advisable.

In fact it's PPI mis-selling all over again. That the industry makes £1bn a year from the sale of these products speaks volumes.

Back in 2003 it was revealed that 47% of Dixons pre-tax profits came from warranties and that Comet made up to 80% of its profit from sales of warranties. That may now have changed, but if these products were as "valuable" to consumers as retailers suggest then there would be no problem sending them home to buy them elsewhere, much as you do when you buy a house or a car.

The OFT is now considering whether to accept the retailers' proposals, or whether it should refer the market to the Competition Commission for a detailed investigation. The watchdog will be aware that taking action that would curb the profits made in this sector will affect retailers' profits and could hit jobs.

Don't hold your breath for speedy action to protect the consumer.