Saturday, February 02, 2008

Egg's perogative

What a load of crap is being said over Egg's decision to withdraw service from some customers. Anyone would think they are some vital utility providing a life and death service. The BBC appears to have got itself in a real lather over the whole thing and has appointed itself as the defender of the downtrodden masses who been ground down by big business.

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.

I suspect the 35 days notice is the contract period which they honouring, unlike those who don't pay their bills on time.
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".

I don't know why but if Mr Griffiths is so concerned and thinks that the credit risk his so low then perhaps he could act as a guarantor?
The bank is not demanding immediate repayment of balances or making any changes to customers' terms and conditions or their interest rates.

The bank is not demanding immediate repayment of balances or making any changes to customers' terms and conditions or their interest rates.
So they are still getting their pay off period so no harm done there then.
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".

Yep, I would be pretty pissed off in this situation as well. But if this bank doesn't want my custom here's another 9 who will, assuming you have got a good credit rating.

But here's the other side of the coin and one which scares Egg, or its owners anyway. Do a Google search (or any other search engine) on IVA's. These are companies looking to help people get out of paying off all their debts. Even the BBC acknowledges there's a problem:
There were more than 44,331 IVAs taken out in 2006, compared with fewer than 5,000 in 1998.

The figures began to fall during 2007, but are expected to rise again during 2008.

Anyway, aren't the banks always held as being irresponsible by whenever debt levels rise and people can't repay?


MarkC said...

First, and o/t; thanks for the heads up abouy YPM. Brilliant episode and I would have missed it, otherwise.

Second, Egg, I agree wholeheartedly; I mean, if I walked up to any one of the people bitching about Egg and demanded they lend me a tenner, and then got stroppy if they refused, they'd think I was mad.

Don't know what's behind the Egg decision for real, but it's not unlikely it's exactly as they suggest. Credit card issuers have become extremely sophisticated at behavioural analysis; they pull information from their customer accounts about performance of the account, profitability, original credit score attributes at application, and mix it with information about other credit commitments and behaviours available from credit reference agencies. From that, it's statistics to model the "at risk", the "on the slide", the "getting into trouble" customers.

Inevitably, there'll be some who were called wrongly if the bar's set too high, or too low, but if as they all claim, they aren't using the card, what's the problem? Egg's not making much out of them, for sure.

And as yet, I haven't seen anyone pop up and admit to a poor or deteriorating credit position; just lots of angry people who feel slighted. GET OVER IT. There's no law requiring Egg to do business with you, any more than there's a law requiring you to do business with Egg.

The irony of ignorant, gob-on-a-stick politicians and meejah commentators who on the one hand criticised Northern Rock for "lending long, borrowing short" (which wasn't really their problem; the building societies survived like that for decades) and for lending 100%+ (and so allowing many first time buyers onto the housing ladder) now criticising Egg for being prudent is lost on most people, it seems.

Bollocks to the lot of them. It's just as well IQ wasn't part of the issuer's credit score attributes.

MarkC said...

You might enjoy this:

The Great Simpleton said...


Some good points on the way CC companies work. I was once called because I had a made a purchase that was "out of character" or something like that and they wanted me to physically check I had my CC with me.

Thanks for the heads up on Daily Mash. I have it in my favourites but not on my reader so I might have missed it.