Egg, (now possibly the UK's least favourite internet bank), has at least three millionaires among the customers it dumped last month, because it considered them a bad credit risk.
They were among 161,000 customers whose credit cards were cancelled last month when Egg purged its books of people it feared might fail to pay their bills.
Now, (and something that won't come as a shock to most of you who have talked to their "customare services") despite a meeting with the Labour MP and former consumer affairs minister Nigel Griffiths, Egg said there would be no change in their policy.
The MP said that among the dozens of letters he had received after speaking about the issue on several occasions at least three were from millionaires!
One correspondent said that his gross income last year was £1.1million and that he had worked for one of Britain's 50 largest companies for 26 years.
"My credit rating is excellent and I even happen to have shares worth £180,000 in a Citigroup account," one wealthy former Egg customer wrote. "I find it outrageous that this bank can make these statements and get away with it."
Egg, (which was set up by Prudential, the UK insurer) was bought by Citigroup, the US banking giant, last May and as a result, Egg reviewed its 2.3 million credit card accounts.
Many of you who were their customers complained about losing your cards, but the bank said you might become a high risk in the future.
An Egg spokesman commented on their position:
"The review was based upon a large number of variables and studied the level of risk inherent in groups of customers, rather than every individual." "So 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."
The spokesman explained that 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!
Oh really? And how might that be? Do they have some sort of crystal ball or specially trained dog?
Nope; the Egg spokesman said that indicators of credit risk included:
- the number of credit cards that you held
- whether you were using your credit card more frequently than you had in previous years
- whether you used the card to withdraw cash in sums that took them close to your borrowing limit
He did not specify how many of the 161,000 of you who lost their cards were those that posed a potential risk to the bank.
Egg denied that failing to make a profit from customers who always paid off their borrowings each month had been a factor in its decision to cancel the cards. It pointed out that it still made money on them, because it received a fee for every transaction.
Mr. Griffiths said about his meeting with the Egg heads:
"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."
Egg said they will
consider any complaints from those of you who feel its decision to close your accounts was unreasonable.
If you had a card that was cancelled, you will not be able to use them after the notice period. But you will not be forced to repay any outstanding money in one go unless you want to.
You will still have the option to pay the minimum monthly repayment, or pay larger instalments until the balance is cleared.
Claim back your credit card fees here
Mr. Griffiths said that the indicators used by Egg to model future risk would undoubtedly catch some responsible customers as well as those who posed a credit risk. "The whole industry has to look at this since it could unfairly penalise sensible borrowers," he said.
He has also asked the Office of Fair Trading (OFT) and the Financial Services Authority (FSA) to investigate Egg's actions. The OFT said that although credit risk was a matter for individual businesses, it would look at any complaint received and decide whether to investigate. The FSA said that it could not comment on individual companies or investigations.
Egg's action to get rid of so many credit card customers, is seen as part of a wider trend by banks to move their customers away from risky unsecured lending on credit cards and personal loans and towards lending secured on homes, which is safer for the bank.
Those of you aged between 34 and 49 are most likely to have your credit limits cut or your cards cancelled, while those of you aged 25 or less and who have very little credit history and no property, are more likely to have your limits extended.
Some banks expressed glee, albeit privately, at what they saw as a public relations blunder by Egg's new owner.
One banker said: "If they thought that this would go unremarked upon they clearly didn't understand British banking".
Nope they clearly didn't!
This is definitely one case where a bank has been left with Egg on its face and shown to not be all it's cracked up to be!
Are you still seething after Egg's decision to dump you as a customer? What do you make of their decision to not change their mind?
Why not let us know in the comments below?
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