The ABI is to confront the Competition Commission (CC) over the sale of extended warranties at a public meeting at the Institution of Electrical Engineers (IEE) on Friday.

ABI head of general insurance John Parker will seek to differentiate between 'ring-fenced' insurance offered through retailers and warranties underwritten by insurance companies.

The investigation follows a report last July by the

Office of Fair Trading, which concluded that self-regulation of the £800m market, introduced under the British Retail Consortium Code of Practice in 1995 had failed.

The CC raised concerns over a possible lack of choice for consumers, excessive prices and insufficient information and competition at the point of sale.

Insurers including Allianz Cornhill, Landmark, Pinnacle and London General could face price controls if the commission imposes tough restrictions on the way electrical warranties are sold.

Possible outcomes could include prohibiting electrical retailers from selling them at the same time as goods, which is where most sales are achieved.

The hardest hit would be Dixons, which is believed to generate between one third and half of its profits from selling extended warranties.

The CC is due to report to Patricia Hewitt, Secretary of State at the Department of Trade and Industry by 1 July.