Egg ditches 161,000 credit card customers

Egg has garnered widespread condemnation for its decision to cancel the cards of 161,000 customers.

The online bank has written to customers telling them their cards would be cancelled in 35 days – following a risk review by the firm.

Egg – bought by Citi Group in May last year from Prudential – said in a statement: "The credit profiles of affected customers had deteriorated between the time they joined Egg and the acquisition in May.

"The decision to end these customers' agreements was taken after conducting a one-off, extensive risk review."

Some seven per cent of Egg's credit card customers will no longer be able to use their cards – although they will not be forced to make immediate repayment of balances and the firm is not making any changes to its current terms and conditions or interest rates.

Former consumer affairs minister Nigel Griffiths has now called on the Financial Services Authority (FSA) to investigate the decision – following reports many customers with good credit records are being ditched by Egg – calling the move "unacceptable"

The Labour MP told BBC Radio 4's PM programme: "It is quite clear to me they have been making false and misleading claims about why they have carried out this risk review and it seems to have been an incompetent risk review.

"The FSA has a duty to investigate what appear to be false claims by Egg."

He added: "We know they have been accused of acting too late on Northern Rock and we need an investigation now because to hold a consumer credit licence, as Egg do, they do have to ensure they are giving accurate information and not misleading information."

Egg has denied claims it is getting rid of customers who regularly pay credit card balances because they are unprofitable.

Meanwhile, Angela Knight, chief executive of the British Bankers' Association (BBA), told the PM programme the review of customers was "sensible".

"Over the last two years, credit conditions have been tightening up. Banks have been looking at a greater number of criteria before they start to lend someone money," she said.

"That's something that is demonstrably correct. All the consumer groups have been asking for just that."

She added: "While it is lovely to spend, it is the paying back that is always the difficulty. It might seem a bit hard to say to people 'you do need to stop spending' but it does actually make real sense."