Inquiry into Egg's cancelled cards considered

Inquiry into Egg's cancelled cards considered
Reuters - 1 hour 53 minutes ago

LONDON (Reuters) - The consumer watchdog is considering launching an inquiry into Citigroup-owned Internet bank Egg after the lender wrote to 161,000 customers last month cancelling their credit cards.

A spokesman for the Office of Fair Trading confirmed on Monday that a written complaint by a member of parliament and former consumer affairs minister, Nigel Griffiths, to the financial regulator had been passed on to the OFT, which was now pondering its next move.

"It is too early to say whether we will investigate," the spokesman said. "We will consider the complaint carefully."

The spokesman said a decision would be taken swiftly, most likely within a matter of weeks.

Egg has come under fire from consumer groups who accuse the bank of cutting off customers that do not make enough money for Citi.

But the Internet lender says the decision to cancel the cards -- amounting to 7 percent of its 2.2 million customers -- was the outcome of a review of the business after it was acquired last year from insurer Prudential.

"It was not, as has been suggested, an excuse to exclude some 'unprofitable' customers," an Egg spokesman said last week.

"In this one-off review we assessed that the credit profiles of these customers had deteriorated from the time they joined Egg until the time Citi acquired Egg in May 2007 and that they presented a higher than acceptable credit risk to the bank."