No sign of inquiry into Egg move

Egg has been advertising for new customers

No official complaint has been lodged that could prompt an investigation into the cancellation of credit cards by internet bank Egg.

MPs have called for an investigation after some customers were told their cards would be withdrawn in 35 days.

But the Office of Fair Trading said it would need an official complaint before it could decide whether or not to act.

Egg says 161,000 people whose credit profiles have worsened were affected, a claim that has angered many.

The BBC has been deluged with messages from angry customers insisting they have a perfect credit history. They believe they have been purged because Egg simply does not make any money from them.

The internet bank has denied this is the reason for some withdrawals. It said 7% of customers' cards were being cancelled as they posed an unacceptably "high risk".

I was shocked when I received a letter saying my account was being cancelled Mark Mahood Egg credit card customer

"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," an Egg spokesman said.

"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."

Backlash

The move follows a "one-off" review after Egg was bought by US-based Citigroup for £575m last year.

It said that people with a "deteriorating credit profile" were on the list to receive letters informing them of the cancellation.

The 35-day notice period starts on receipt of the letter, which also provides details of how to appeal against the decision.

Customers like Mark Mahood said they were stunned to receive the notification.

"As a 32-year-old earning £35,000 a year with an excellent credit rating, and an Egg customer for five years who has never missed a payment - repaying over £7,000, I was shocked when I received a letter saying my account was being cancelled," Mr Mahood said.

He was initially worried that his card was being used fraudulently by somebody else, prompting a poor credit rating.

He said he paid off the balance every month and would now have to take his custom elsewhere.

Cases such as his led to calls over the weekend for an inquiry into the move by some MPs.

The Financial Services Authority said that such a probe was not in their remit.

Meanwhile a spokeswoman for the Office of Fair Trading said that they would be in a better position to judge the issue after receiving an official complaint.

Credit score fears

Some customers have expressed concerns that the move could affect their chances of borrowing money in the future.

But credit reference agencies said it could even have a positive effect on their scores.

James Jones, of Experian, said: "If you have no balance on your card then that account will be closed, which will have a positive impact on your credit report."

And a Callcredit spokeswoman said: "It won't have any detrimental effect. Egg will get in touch with us to say the account has been settled and closed."

Egg has continued to advertise cards for new customers, with one flyer promoting a balance transfer deal which is interest free for up to 15 months.