Rubber Duck
2nd February 2008, 04:42 PM
This tells me much more about Citicorps credit rating than anything else!
http://news.bbc.co.uk/1/hi/business/7224268.stm
Angry customers of internet bank Egg have hit out at its decision to cancel their credit cards.
Egg says 161,000 cards belonging to people whose credit profiles have deteriorated since they signed up will stop working in 35 days time.
But people who insist they have good records have been contacting the BBC to say they are on the list.
A Labour MP is asking the banking industry watchdog, the Financial Services Association, to investigate.
Nigel Griffiths, a former deputy leader of the House of Commons, said Egg's action was "unacceptable".
A spokesman for the bank said those affected were customers it no longer wanted to lend to "regardless of their current status".
Credit cards are being withdrawn from 7% of Egg's customers who it deems to pose an unacceptably "high risk".
This could include those who have missed repayments or exceeded their credit limit.
Cardholders will be able to continue making minimum monthly repayments on their balances but will not be able to spend any more after the deadline.
The move follows a "one-off" review after Egg was bought by US-based Citigroup for £575m last year.
The bank is not demanding immediate repayment of balances or making any changes to customers' terms and conditions or their interest rates.
The 35-day notice period starts on receipt of the letter, which also provides details of how to appeal against the decision.
But the move has triggered an angry backlash from some customers who told the BBC they received a letter informing them of the withdrawal, despite having an excellent credit history.
Whilst it is lovely to spend, it is the paying back that is always the difficulty
Angela Knight
British Bankers Association
Gillian Cox, of Farnham, Surrey, said she was "absolutely furious" to learn her credit card had been cancelled in what she described as an "unbelievable arbitrary action".
Mrs Cox said she and her husband are "retired, no mortgage, no debts" and "always paid the balance off in full each month".
She added that she had contacted credit reference agency Experian who said she was marked as having an excellent credit rating, "thus totally negating Egg's claim that this measure is about credit risk".
A spokesman for Egg said: "We are sorry some customers are upset after receiving notification we are ending their credit card arrangement, but they are people we do not feel it is appropriate to lend any money to."
He added: "The decision was taken after an extensive one-off review of our credit card book following acquisition by Citigroup."
"We can certainly understand the concerns, but even if people are up-to-date with repayments, they are people we decided we no longer wish to lend money to regardless of their status."
This will not have a detrimental effect, it may even have a positive effect
Peter Brooker
Experian public affairs director
Angela Knight, chief executive of the British Bankers Association, said that Egg's action was "a sensible way of looking after a business".
"Whilst 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 so to do."
Peter Brooker, public affairs director of credit reference agency Experian, said the move would not have a negative impact on the credit rating of those affected and could even improve it.
"Credit reports only have balances showing as outstanding or settled and a date. So when Egg updates its portfolio with us, it would just say those accounts have been settled," he advised.
"That will not have a detrimental effect, it may even have a positive effect, but that depends on the scoring mechanisms used by lenders and the other balances the individual has.
"Some lenders might feel that someone with five credit cards is a risk but someone with four is a better bet and the fact that one card has been settled could be a positive sign. To other lenders it may make no difference."
Egg's decision could be a signal of the tightening credit market, with consumers facing more difficulty in repaying debts and reducing spending.
http://news.bbc.co.uk/1/hi/business/7224268.stm
Angry customers of internet bank Egg have hit out at its decision to cancel their credit cards.
Egg says 161,000 cards belonging to people whose credit profiles have deteriorated since they signed up will stop working in 35 days time.
But people who insist they have good records have been contacting the BBC to say they are on the list.
A Labour MP is asking the banking industry watchdog, the Financial Services Association, to investigate.
Nigel Griffiths, a former deputy leader of the House of Commons, said Egg's action was "unacceptable".
A spokesman for the bank said those affected were customers it no longer wanted to lend to "regardless of their current status".
Credit cards are being withdrawn from 7% of Egg's customers who it deems to pose an unacceptably "high risk".
This could include those who have missed repayments or exceeded their credit limit.
Cardholders will be able to continue making minimum monthly repayments on their balances but will not be able to spend any more after the deadline.
The move follows a "one-off" review after Egg was bought by US-based Citigroup for £575m last year.
The bank is not demanding immediate repayment of balances or making any changes to customers' terms and conditions or their interest rates.
The 35-day notice period starts on receipt of the letter, which also provides details of how to appeal against the decision.
But the move has triggered an angry backlash from some customers who told the BBC they received a letter informing them of the withdrawal, despite having an excellent credit history.
Whilst it is lovely to spend, it is the paying back that is always the difficulty
Angela Knight
British Bankers Association
Gillian Cox, of Farnham, Surrey, said she was "absolutely furious" to learn her credit card had been cancelled in what she described as an "unbelievable arbitrary action".
Mrs Cox said she and her husband are "retired, no mortgage, no debts" and "always paid the balance off in full each month".
She added that she had contacted credit reference agency Experian who said she was marked as having an excellent credit rating, "thus totally negating Egg's claim that this measure is about credit risk".
A spokesman for Egg said: "We are sorry some customers are upset after receiving notification we are ending their credit card arrangement, but they are people we do not feel it is appropriate to lend any money to."
He added: "The decision was taken after an extensive one-off review of our credit card book following acquisition by Citigroup."
"We can certainly understand the concerns, but even if people are up-to-date with repayments, they are people we decided we no longer wish to lend money to regardless of their status."
This will not have a detrimental effect, it may even have a positive effect
Peter Brooker
Experian public affairs director
Angela Knight, chief executive of the British Bankers Association, said that Egg's action was "a sensible way of looking after a business".
"Whilst 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 so to do."
Peter Brooker, public affairs director of credit reference agency Experian, said the move would not have a negative impact on the credit rating of those affected and could even improve it.
"Credit reports only have balances showing as outstanding or settled and a date. So when Egg updates its portfolio with us, it would just say those accounts have been settled," he advised.
"That will not have a detrimental effect, it may even have a positive effect, but that depends on the scoring mechanisms used by lenders and the other balances the individual has.
"Some lenders might feel that someone with five credit cards is a risk but someone with four is a better bet and the fact that one card has been settled could be a positive sign. To other lenders it may make no difference."
Egg's decision could be a signal of the tightening credit market, with consumers facing more difficulty in repaying debts and reducing spending.