Neil,
So sorry to hear about your problems. I hope that the following may help.
I cannot assist directly as I have a 206 which didn't catch fire, however, I have had vast experience with dealing with Peugeot UK, and the way they 'hide' behind the dealers. I would advise you to try the following:
Let me explain first with an example:
A cambelt breaks under warranty, this failure causes damage to the top end of the engine. There is usually no doubt that this would be covered under warranty - note also that the cost of this is fairly low.
Ok, look at your problem, something fails (wiring for example), this caused damage to the rest of the car (fire), probably now a write off
- but this time the cost is high.
SO these two examples are kind of the same, the only reason Peugeot are not repairing is 'cos of the cost.
What you need to do is be sneeky, find someone with a Pug, anything will do. You need to contact Peugeot with the 'pretend' case of cambelt failure and get in writing that the total cost of the repair is covered, - record the conversation if necessary (but inform them that you are doing so).
This letter/recording can then be used as evidence that in the case of a part failing and causing damage the whole cost would be covered.
Then contact WatchDog (they would love this), contact Auto Express also and go and see a solicitor who has experience of this type of case. It is worth spending £50 on a letter.
Martin