Egg in bad odour

On the face of it, the response of credit-card company Egg to the debt crunch was praiseworthy...

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Last Updated: 31 Aug 2010

Earlier this month, it sent notices out to 161,000 of its cardholders advising them that their card would be cancelled after 35 days. The action sprang from a 'one-off' review following the acquisition of the company from the Prudential by US bank Citigroup in May last year.

Egg claimed that customers put on notice were considered to have 'a higher than acceptable risk profile' and that they are 'people we do not feel it is appropriate to lend any money to'. The trouble was, among those who received the letter were numerous customers who claimed that they had always managed their credit-card borrowings impeccably, and had never gone over their limit or missed a payment.

Inevitably, such prudent customers were inclined to conclude that they had been given the elbow not because they posed a risk but because Egg had decided that it was having a hard time making any money out of them.

A spokesman for trade body the British Banking Association said Egg's action was 'a sensible way of looking after business'. But was it?

E-mails posted by Egg customers showed their concern that the action taken against them would permanently affect their credit rating, and some even thought they might have been the victims of identity theft. Several were appalled by the rudeness of the Egg letter in putting the heading 'Your Egg card has been cancelled' even before the 'Dear Sir or Madam' bit.

Many of these victimised customers also keep savings with Egg and, not surprisingly, vowed to take their deposits elsewhere and to have no more truck with the company. And, following a complaint about Egg’s behaviour to the FSA by Labour MP Nigel Griffiths, the issue has now been referred to the Office of Fair Trading.

The company is, of course, entitled to choose who it does business with. But the sledgehammer way in which it dealt with thousands of perfectly honourable customers does it no credit.

 

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