Egg Policy Change ?

dag_2

You know all those people who resent being called "risky", but who also happen to have savings with Egg or Citigroup, and who are now thinking of pulling those savings out, just to spite them? Well - there's an interesting take on that here.

Citigroup has already lost billions through trading in downgraded debt. And yet if Egg were to focus on customers paying for debt, rather than providing assets to leverage, the company may damage their own liquidity.

I know this is how rumours start, but personally, I think that's quite scary.

It really does look as though the people who've had their card accounts axed are the better payers. And it stands to reason that these people will have more savings. If these people start pulling their savings out in bulk, then that could cause problems for everyone who has savings with Egg, regardless of whether or not they also have credit cards with Egg.

Indeed, a threat to Egg's liquidity could mean that Egg may be forced to freeze even more credit card accounts than the 7% they've already decided to home in on.

Hopefully, though, Egg will have a significant number of savings customers who don't also have credit cards, and are therefore not at risk of being offended by the withdrawal of a credit card they never had in the first place. Time will tell.

But I suspect I'm making more of the issue than is really there. But maybe I'm biased. To be honest, I'd really prefer it if Egg did not run into liquidity problems as a result of this fiasco.

MUDGUTS

I can see a real change in peoples attitude to credit happening this year.

A day or so ago my fixed term overdraft with Halifax was not renewed. Now I have had a slight problem with one of my credit cards, (that happened to be a Halifax Visa) but the other two I hold and my current account have been run very well, lots of money going in and no failed cheques or DD, whatsoever.

To cut a long story short they probably do see me as a credit risk due to the card account and I don't blame them. However, I have started a new job this year and now earn three times what I did when they gave me the overdraft in the first place. This is apparent from my current account, when I mentioned this and showed them a copy of my contract they just weren't interested.

I did sort it out but I think the banks are in real trouble now and may be realising that we are on the brink of a recession, possible house price crash, etc. This time it will be different. People can’t borrow from Peter to pay Paul, using cards to get themselves out of the SH*T, because they just don't have the ability to. Banks know this.

The Egg situation is the start of a big change, (sensible) people are going to stop relying on credit and also I can see (as a result of this) people not worrying about their ‘credit rating’, if you don’t need credit why bother about your ‘credit rating’. More importantly, people will decide not to pay back debt and take their chances with bankruptcy and this will be a disaster for the banks.

If you don’t need credit why bother about your ‘credit rating’.

Counter55

I haven’t read all the pages so apologies if this has already been mentioned.

Given Egg will be updating the credit reference agencies with a long list of closed accounts all at one time, the chances are that if you are shown as having an account closed on this date, it was Egg that closed the account and not you.

Egg are either actually saying or allowing it to be known that they are closing these accounts due to the customers being a bad risk – and not perhaps due to the customers not being profitable etc.

Some of the people receiving closure letters appear not to be high risk - pay off in full each month and no other debt - and Egg labelling them as high risk at the credit reference agencies will unjustly damage those people’s ratings and character. (Other banks seeing the closure date of the Egg card will make assumptions).

I’m not a lawyer but I understand that person A telling person B that B is a bad person can’t be slander / libel as it is not publicising it. But effectively publishing on the credit agencies would be if not accurate.

For those where Egg cannot justify the ‘bad risk’ label – wouldn’t those people have grounds to sue for libel and damage to character?

Just a further note that I consider it reasonable for Egg to act like a commercial business and reduce its risk and costs and that some lenders have been irresponsible in their lending and need to correct this. Also that some people have been irresponsible in their spending.

oldtup

Does anyone know whether or not a credit report will identify the fact that an account was closed at a certain time, or that the credit card company initiated the closure?

DifferentFromTheNorm

dag wrote: »

Maybe it's a computer error, or maybe Egg really do think the people they've axed have either been bad payers in the past, or are likely to become bad payers in the future. Or maybe they think the people are too unprofitable, and that the account doesn't justify the other costs, or other risks, such as being a victim of identity theft. Maybe Egg are just simply plain lying.

Whatever the truth is, one thing strikes me as odd about all this.

To put it in perspective, let's remember that credit card companies do have the right to freeze people's accounts at any time. They can and do use from time to time, not just because they think people might be bad payers, but also to prevent fraud by third parties, who may or may not be associated with retailers that you have used your card with.

However, they don't have the right to insist that you make payments on your account any earlier than you would have otherwise done if the card had stayed active. This is one way in which a credit card debt is very different to an overdraft. In other words, you still have the right to pay off in full, or to make only the minimum payment, or to pay any amount in between in any month, and you continue to have the right to pay no more than the minimum payment each and every month until the balance is finally cleared.

By contrast, the repayment of an overdraft can be demanded in full at any time.

However, when credit card companies do exercise their right to freeze people's accounts, they don't usually give people any notice that they're going to do it. Since it's usually done to try to prevent fraud or bad debt, it's very unusual to give notice. That's because giving notice means the fraudster has more chance of doing a runner with the money. The whole point of freezing the account is to prevent that happening.

So I think it's very unusual that Egg have given notice this time.

The line about their customers being "too risky" is clearly a load of codswallop. After all, now that you know Egg plans to freeze your card in the future, what's to stop you maxing it out and leaving the country permanently before that happens? If Egg thought the risk on your account was that bad, they would have frozen your card immediately, without giving you any notice. The fact that they haven't done this is a sign that your own credit-riskiness is not the only factor in Egg's decision.

Ironically, the fact that they've decided it's safe to give you notice is a sign that they think your credit risk is actually better than they're letting on. Choosing to give you notice of your card withdrawal before actually doing it could have been a good PR opportunity. It could have been opportunity for them to show that they're being fair and straight with you. It's just a shame that it's backfired so spectacularly! :rotfl:

Of course, none of this means that Egg won't freeze your card immediately, before the notice period is up, if they do come to think that your card is at risk of fraud within the next 35 days.

Just a thought.

I work for Egg. It doesn't have anything to do with potential fraud. Blocking the card because of suspected fraudulent use or a fraudulent application is done immediately.

Egg are giving 35 days notice as they're required to give at least 30 days notice when they intend to end the card agreement. They are giving the 35 days (5 days more than they need to) to allow for any potential delay in postal delivery etc.

You're right about someone potentially maxing out their card if they wanted to. Of course, they would still have to pay it back so it's not really in anyone's interest to do that.

This came about very quickly for staff, we weren't told about this until the last moment. Anybody looking for specific answers from Egg simply won't get any unfortunately, the information members of staff can give is scripted and is general so you won't get any answers specifically about your account.

Someone earlier mentioned requesting a DSIR (data subject information request) - also known as SAR (subject access request). But, this won't provide any additional information as to why your card agreement has been terminated - you would only be able to see what the advisor sees, a one line note confirming the 35 day notice period has been served.

Personally, I can understand why some people are upset and initially confused - a feeling shared by staff who had little to no warning of what was about to happen.

It's fair to say that I also agree with another previous poster who said that MSE users aren't maybe a true representation of what is happening (of course it's part of the picture but not each case is different).

One thing is for certain though, I bet the bosses of Experian and the other credit reference agencies have pound signs in their eyes and sound of ringing tills in their ears!

BritBrat

Now what was Martins program about last week?

Was it stoozing? do you think the people at egg could have watched it.

netlang

YorkshireBoy wrote: »

The large supermarkets, where a great deal of CC spend is made, won't pay anywhere near that to their merchant acquirers. I'd be surprised if it was even 1%.

I run a small business and pay 1.75% for Visa or Mastercard + the monthly charge. (We put through about £1000 per month via the terminal)

thespaceshanty

oldtup wrote: »

Does anyone know whether or not a credit report will identify the fact that an account was closed at a certain time, or that the credit card company initiated the closure?

No, as stated in the letter from EGG, no comments will be made on your credit file, they would not be allowed to do that.

LittleVoice

quote from the Information Commissioner's site (my bold italics):
"The Data Protection Act gives you, as an individual, a limited right to prevent significant decisions being taken about you solely by automatic processing. This affects only those decisions made by a computer where there is no human involvement in the decision. It could include, for example, a decision about your performance at work or your credit worthiness."

I wonder how this affects what Egg have done?

MoneyMadness_2

I think this is hilarious now. It is quite clear we have blatantly been lied to. I have not actually seen a single post from someone who claims to be high risk and has had their account closed? Has anyone else? I don't really care about the closure, but I'll be damned if I'm lied to, or this is some backhanded deal to make more money for the Credit Agencies.