Many of us sensibly take out warranties to protect our new cameras, TVs or the kids' first laptop, but it seems we aren't shopping around for them and there's a lack of information available about whether or not they're good value for money.
The watchdog is concerned that only a quarter of us shop around for warranties. This happens because retailers tend to sell warranties to you when you reach the till to pay for your electrical goods. In this way the retailer has an advantage.
The OFT also worries there is a lack of information for shoppers to make an informed decision about whether the warranty offers value for money.
This guide on extended warranties spells out pitfalls to avoid when buying a warranty to ensure you get good value for money.
To prevent the Competition Commission from investigating the warranties market, Dixons, Comet and Argos - the largest providers - have offered to set up a price comparison website.
They will also provide more accessible information through in-store leaflets, which include details of alternative warranty providers. This will allow us to suss out our options, and look for the best deal for them.
The electrical giants have also vowed to carry out regular independent mystery shopping exercises. These involve an undercover 'shopper' going in to buy something to test whether the store is abiding by the new fairness rules.
Ann Pope, director in the OFT's goods and consumer group, said: "Millions of extended warranties are sold in the UK each year and we remain concerned that, despite recent improvements, this market does not work as well as it could for consumers.
"We welcome the retailers' initiative in offering undertakings and we now want to hear from consumers and others whether they think these will lead to improvements."
The website, which the OFT has agreed to, will have to undergo consultation before the watchdog decides whether to refer the market to the Competition Commission for investigation.