Egg won’t be backing down
March 3, 2008
Several weeks ago the Internet financial giant Egg shocked customers and industry professionals when it announced that it was withdrawing the credit card facilities of 161,000 customers. Egg officials said that the customers whose credit had been withdrawn were either a high credit risk or were heading in that direction. The decision was made after Egg reviewed over two million credit card accounts following the takeover by Citibank.
Many industry officials, campaigners, and even some government officials voiced concerns that the real reason behind the move was that Egg was not making enough profit from the customers because they were reliable payers. However, these are claims that Egg has strongly denied. One of the government officials that have been trying to get to the real reason behind the action is Labour MP Nigel Griffiths, who is also the former consumer affairs minister.
In a bid to try and find out more about the reasons behind the move Mr Griffiths recently announced that he would be meeting with the chief executive of Egg, Ian Kerr.
Before the meeting Mr Griffiths stated: “Egg has got a lot of explaining to do. If you want to get rid of customers who are not bad credit risks but who you just don’t make money out of, then you should make a charge for your card.” He went on to state: “Egg’s job now is to prove they have an honest intention in this. They made a mistake, we need an apology and compensation for wasted credit agency checks.”
However, the meeting, whilst described by Egg as helpful and constructive, did not go exactly as Mr Griffiths had planned by the sound of things. Following the meeting Egg officials stated that there would be no change to the policy.
One spokesperson for Egg stated: “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. 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.”
Mr Griffiths and the Treasury Select Committee have filed complaints over the Egg situation, and the Office of Fair Trading is currently looking into the matter in order to determine whether an investigation needs to be launched.
After the meeting Mr Griffiths stated: “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.”
In the meantime, the customers that have been affected have been left to repay their balances, even if only making the minimum monthly repayment, and they have also been left to look for alternative means of credit.
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