Egg Policy Change ?

dag_2

However if someone has lots of cards with no balances on them is probably in my eyes a good financial planner as they have control over their spending.

Yes, but that's the point. Being a good financial planner does not mean there's no risk.

Anything could happen. You could fall ill. Or you could lose your job. Or you could be hit by identity theft. Or you could even phone up to request replacement cards more often than the average punter, or phone up with more questions about your account than the average punter, thereby causing your account to be more expensive to administer than average.

Like Martin Lewis clearly says in his article about credit scoring, the only risk that lenders are really worried about is the risk that they won't make a profit on the account. The possibility of the borrower not paying the account is one of those risks, but it's not the only risk.

Once you realise what the banks are talking about when they use the word "risk", then I think you'll find that Egg have told the truth. They genuinely have only axed the accounts that are too "risky".

Splitting hairs now - and I haven't received a letter myself yet, so I'm not sure how the letter is actually worded - but I think it only says that the account itself is too risky. None of the letters explicitly say that there's anything inherently risky about the customers who hold those accounts.

I'm not trying to defend Egg, though. Personally I think these games in semantics absolutely suck. But I can understand the reasons why they're reluctant to elaborate on the risks. Being forced to elaborate could create further risks, as people may then try to dress up their future credit applications to make them look less risky than they really are.

Mind you, I think a refund of any enquiry fees we've incurred as a result of this might be a nice gesture.

Egg may well have acted within their rights, but neither Egg nor any other UK bank can be sure that the regulatory framework which determines what their rights are won't change as a result of this. That's because at least some of the people affected by this are newspaper journalists, and others are MP's sitting in the House of Commons.

Mind you, I suspect the media will get bored of it after a day or two, and that nothing will actually happen. I could be proved wrong though.

central

I have an egg money card usually quite heavy usage, always pay the balance off but it has been used much less for the last few months as I have reached my cashback limit. There are just a couple of continuous payment authorities, one to sky and one other. My egg money card has not been cancelled.
So far it seems that it is more likely that the egg card rather than the egg money card has been cancelled, (has anyone had an egg money card cancelled?) and has anyone had a card with a continuous payment authority already set up cancelled?
Conversely has everyone with a continuous payment authority not had their card cancelled.
It just seems to me that this is more random than people are thinking, if it were, it is much more likely to be due to the financial position of citigroup and the credit crunch rather than anything else.
Is there going to be a run on Citigroup next - is that possible?

wyebird

All of this has led me to wonder, what, if any information, Can Egg get from those who use Egg Money Manager? It would be a far more detailed customer profile, than they could get from a CRA. I know the passwords etc aren't held by egg, but does their site capture the information retrieved in any way?

trisontana

I see the Daily mail is still peddling its "A banking giant is banning 160,000 debt-ridden customers from using their credit cards." story on the This is Money website. I have tried to post a comment on there mentioning the people who are not bad credit risks, but as yet it hasn't appeared.

sandra_holland

sds1pg wrote: »

Just had a letter from Egg today (followed by an uninformative phone conversation). Theyre ending my use of my card with them, after 10? years based on "credit profile of this account"...

The problem is my credit rating from Experian is excellent, Ive never missed a payment with them and I pay off the debt each month....so wheres the problem?

The only thing I can think of is that they tell me this decision follows Citibanks takeover of Egg.

Could it be that Citibank are simply wanting to rid themselves of customers that do not earn them interest on their accounts?

Id be interested in any thoughts or similar experiences.

P

I too received a letter and like it appears most of us I have an excellant credit rating. Added to that I have been paing my credit card balance off over the last few weeks. However, I made a mistake and over paid my card by over £600. I found this out when I checked my statement on line last night. I phoned straight away and asked EGG to repay the credit back to my bank account. They were kind enough to say they would not charge me for performing this action and I should have the credit in my account within 6-10 days. The FCA should do something about this company and also for us we should get at least an appology in writing from them for the accusations they have made.

jimbo26

central wrote: »

Is there going to be a run on Citigroup next - is that possible?

I don't think so. I think a lot of customers who have savings will move them elsewhere, not because they are scared that Citibank will go under just to stick two fingers up to them.

There are rumours that GE Money are looking to get out of the store card market. It seems US banks in general are having a tough time.

Psiloman

Assumptions:
1.[FONT=&quot] [/FONT]In actuarial terms we all present some type of risk and therefore risk can never be zero
2.[FONT=&quot] [/FONT]Reference to a risk profile is actually a risk vs return / profit profile
3.[FONT=&quot] [/FONT]The illustration of the model is very simplistic
4.[FONT=&quot] [/FONT]I have had a perfect credit rating / history for the duration of the account but manage the account so that I never pay interest i.e. pay full balance each month.
Scenario 1
Egg adjusts their acceptable risk vs profit profile as illustrated by a move from the black to the blue line. I should be unaffected as indicated by position 1.
Scenario 2 (or combination of 1 & 2)
Egg adjusts the baseline for profit / return (Egg denies this) as illustrated by the dotted line. I would be affected by this – account closed.
Scenario 3
For the duration of the account I maintain a perfect credit rating / history but one thing over which I have no control changes – I get older. I move into what in actuarial terms would be regarded as a higher risk age group. This is represented by the green dumbbells – shifting from position 1 to 2 over time. I would be affected by this – account closed.
What is interesting about scenario 3 is how sensitive the model would be for the people in this group. You may have a perfect credit rating and history but not using your credit card in a way that generates profits for the company (see red dumbbell) makes you are extremely exposed to the perceived negative effects of ageing and of course the longer you have had an Egg Card the greater that effect.
My sense is that a significant proportion of those customers upset by Egg’s treatment fall into this category. It is unfortunate for Egg that these customers are also some of their longest-term (previously loyal), financial savvy and probably most vocal. The consequence of this one-off review has had a disproportionally adverse effect on this customer group.
Egg then compounded the problem by rolling this group up with the other !!!!less, debt ridden, bad customers and tarring us all with the same brush. A phased approach to managing the situation would have significantly reduced the negative impact of their actions but then again maybe they were trying to bury the bad news story – sorry you just got too old for us!

YorkshireBoy

wyebird wrote: »

All of this has led me to wonder, what, if any information, Can Egg get from those who use Egg Money Manager? It would be a far more detailed customer profile, than they could get from a CRA. I know the passwords etc aren't held by egg, but does their site capture the information retrieved in any way?

From EMM condition 5.1

The information we collect (using a range of methods including cookies and similar tracking devices) will include information about how you manage and use your Accounts, including the type of transactions you make using your Accounts. We obtain this information automatically as part of operating Egg Money Manager. If you do not want us to have this information, you should reconsider whether you wish to use Egg Money Manager.


"Accounts" means those accounts with Organisations that you have registered with us in order for their inclusion in your Egg Money Manager;

http://new.egg.com/visitor/0,,3_48817--View_1020,00.html

Use it at your peril.

The_Chicken

Psiloman wrote: »

Assumptions:
1.[FONT=&quot] [/FONT]In actuarial terms we all present some type of risk and therefore risk can never be zero
2.[FONT=&quot] [/FONT]Reference to a risk profile is actually a risk vs return / profit profile
3.[FONT=&quot] [/FONT]The illustration of the model is very simplistic
4.[FONT=&quot] [/FONT]I have had a perfect credit rating / history for the duration of the account but manage the account so that I never pay interest i.e. pay full balance each month.
Scenario 1
Egg adjusts their acceptable risk vs profit profile as illustrated by a move from the black to the blue line. I should be unaffected as indicated by position 1.
Scenario 2 (or combination of 1 & 2)
Egg adjusts the baseline for profit / return (Egg denies this) as illustrated by the dotted line. I would be affected by this – account closed.
Scenario 3
For the duration of the account I maintain a perfect credit rating / history but one thing over which I have no control changes – I get older. I move into what in actuarial terms would be regarded as a higher risk age group. This is represented by the green dumbbells – shifting from position 1 to 2 over time. I would be affected by this – account closed.
What is interesting about scenario 3 is how sensitive the model would be for the people in this group. You may have a perfect credit rating and history but not using your credit card in a way that generates profits for the company (see red dumbbell) makes you are extremely exposed to the perceived negative effects of ageing and of course the longer you have had an Egg Card the greater that effect.
My sense is that a significant proportion of those customers upset by Egg’s treatment fall into this category. It is unfortunate for Egg that these customers are also some of their longest-term (previously loyal), financial savvy and probably most vocal. The consequence of this one-off review has had a disproportionally adverse effect on this customer group.
Egg then compounded the problem by rolling this group up with the other !!!!less, debt ridden, bad customers and tarring us all with the same brush. A phased approach to managing the situation would have significantly reduced the negative impact of their actions but then again maybe they were trying to bury the bad news story – sorry you just got too old for us!

This is what I find (mildly) amusing. I was mid 20s with no savings and a poor job (relatively speaking) when I took out the account. Now I'm in my 30s, run my own company and have more financial stability and savings than at any previous time of my life. Go figure. :rolleyes:

I was very close to opening a new ISA with Egg only a matter of weeks ago, partly on the strength of my long association, flawless payment history and previous great customer communication.... SO glad I went elsewhere!

Psiloman

Yep The Chicken...my financial position is soooo much better than when I orginally took out the card...but in the illustration it just can not cannot reduce the effects of ageing. What I mean by that is that I have always had an excellent credit rating / history even when I first took out the card. Over time my financial position has improved dramatically but you can't improve on excellent...but the clock and its negative impacts ticks on!