Egg refusing to back down over withdrawal of credit cards

Internet bank Egg, is refusing to back down after it recently withdrew the credit cards belonging to 161,000 customers.

Following a meeting with Labour MP Nigel Griffiths, a former consumer affairs minister, Egg said there would be no change in policy.

Egg claimed that the customers, who represent 7% of its 2 million credit cardholders, had a ‘higher than acceptable risk profile’. However, all of those affected have excellent credit ratings.

It is understood that Egg withdrew the credit cards because the customers did not make it enough money.

However, Egg claims that the decision was taken after an extensive credit review following the acquisition by Citigroup last May. A spokesperson for Egg said the review was based upon a large number of variables and studied the level of risk inherent in groups of customers, rather then every individual.

The spokesperson added while some customers in that group may be up to date with their payments and have a good record with credit reference agencies and so on, the probability of them becoming a higher-risk customer in the future is higher than we wish to accept.

Although someone might not be in default on their card, the bank could tell that they might be heading in that direction in the future, added the spokesperson.

The meeting with Nigel Griffiths and Egg‘s chief executive, Ian Kerr, was described as constructive and helpful, but said there would be no change in its decision. Mr Griffiths said I expressed my strong concerns about the letters sent to customers, particularly since I felt that more information could have been provided.

“I have received an assurance that Egg will ensure that the credit record of these card-holders will not be affected, as long as they keep up their agreed repayments. The bank will consider any complaints from customers who feel its decision to close their accounts was unreasonable,” added Mr Griffiths.

Customers who had their credit cards cancelled will not be able to use them after the notice period. However, they will not be made to repay any outstanding money in one go unless they want to.

They will still have the option to pay the minimum monthly repayment, or pay larger instalments until the balance is cleared.

Mr Griffiths had asked the Office of Fair Trading (OFT) to investigate the matter but the regulator has yet to announce whether it will proceed.

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