Which came first, the cheating or the Egg?
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In an act that is raising eyebrows across the City, Egg, the internet only bank, has withdrawn credit card facilities from 160,000 customers it deems to pose an ‘unacceptably high risk.’
The internet bank is writing to 7% of its customers to give them 35 days’ notice of the withdrawal. Cardholders will be able to continue making minimum monthly repayments on their balances but will not be able to spend any more after the deadline.
In a statement, the bank said it was not demanding immediate repayment of balances or making any changes to customers’ terms and conditions or their interest rates.
The 35-day notice period starts on receipt of the letter, which also provides details of how to appeal against the decision
Egg was sold to US banking giant Citigroup in May 2007 by life insurer Prudential.
It prompted the review, which picked out customers considered to have ‘a higher than acceptable risk profile.’ It seems that the new owners have brought some of their paranoid fears across the Atlantic with them, perhaps unjustifiably.
The 161,000 customers whose cards are being withdrawn had had a deteriorating credit profile since they signed up, according to Egg spokeswoman Rachel Roe.
This could include those who have missed repayments or exceeded their credit limit.
But the description has angered some customers who have claimed that they received a letter informing them of the withdrawal, despite having an excellent credit history. They claimed that by making repayments strictly every month, Egg was not making a profit from them in interest and that this was the real reason for the move.
Other customers have claimed that despite regularly ‘maxing out’ their Egg card they have not received a letter, seeming to add weight to the profit hunting theories spreading among disgruntled customers, and a rapidly growing group of disgruntled ex-customers.
Some MP’s have begun calling for an investigation into exactly what Egg have done and the reasons behind the move. Unfortunately, the Office of Fair Trading (OFT) said that they cannot launch an official investigation until they receive an official complaint from a customer involved. As yet this has not happened.
I would advise, therefore, that a customer that has had their card services removed complains. We would then have a better idea of just what selection process was used, discover if this is nothing more than a cynical profit maximisation exercise, and if so, customers can act accordingly.
