Has Egg Got It Wrong?

Internet bank Egg stands accused of discriminating against responsible customers as well as not renewing cards for 160,000 debt-ridden credit card holders.

There have been calls for the Office of Fair Trading to launch an enquiry into Egg’s decision to stop 160,000 people using their cards. The claim by Egg was that it had taken the action against high-risk customers. However, there are claims by hundreds of people that they have excellent credit ratings, and they have accused Egg of getting rid of them as customers because the bank makes no money out of them because they pay off their balance in full each month.

Egg said a review caused it to cut 160,000 customers who had a ‘higher than acceptable risk profile’. Industry experts say the bank has made a mistake from which it might struggle to recover as the credit crunch continues to make life tough for banks.

John McFall, chairman of the powerful Treasury Select Committee said on Sunday: “The motives of Egg need clear explanation if this is a case of them ditching long-standing credit worthy customers because they make no money out of them. Perhaps this is an issue that requires an Office of Fair Trading investigation.”

A Liberal Democrat councillor in the Lake District, Peter Thornton, was one who received a letter telling him his credit card would stop working in 35 days. He has been a customer for over five years. He said: “This is more than an amazing PR blunder. There’s a huge amount of people in my position. I’m on a lower interest rate because presumably they’ve assessed me as a good risk. Every business would benefit from losing 10% of the least profitable customers, but the rest of us realise we can’t do that because it would be a PR disaster. They’re on the radio saying it’s just bad-risk people they’re getting rid of. I feel slandered by that.’

Lib Dem MP Tim Farron agreed, saying: “An OFT inquiry would be sensible and overdue.”

However, the Office of Fair Trading has not yet received a complaint. Nevertheless, sources suggested an investigation would be if it received a sufficient response from customers.