Egg cancelled the credit cards of 161,000 customers
OFT to quiz Egg
Monday, 11 Feb 2008 13:00
The Office of Fair Trading (OFT) is to look into the activities of internet bank Egg, after its controversial decision to cancel the credit cards of 161,000 customers.
The OFT will now decide whether there should be a formal investigation, although Labour MP Nigel Griffiths has promised to table a House of Commons motion demanding a full inquiry.
Mr Griffiths made the initial complaint to the Financial Services Authority (FSA) and said he is "very pleased" about the latest development.
"It shows just how seriously they are taking it," he commented.
"I cannot tell you the number of complaints I have had - they just keep flooding in."
Egg has denied claims the cancellations were because the customers, who always paid their bills on time, were not profitable enough.
The internet bank said it had carried out "a one-off extensive review of its credit card book following the acquisition of Egg by Citi".
Egg was acquired by Citigroup in May 2007 for £546 million, despite 2006 losses of around £140 million, and is known to have a history of bad debts.
There has been some speculation the troubled current credit market may prompt other credit card companies to review the risk profiles of their customers.