Internet Bank Egg Fires 161,000 Customers!


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A story is breaking in the UK around internet bank Egg and its credit card business. According to the BBC, Egg has given 161,000, (around 7% of its customer base), 35 days notice that their credit cards will be stopped. The reason given by Egg is that the customers pose a credit risk and are likely to default on their payments as retail credit tightens.

But in a follow-up piece by the BBC, it seems that Egg may be being somewhat economical with the truth. It turns out that many of the customers who have received the Dear John letters regularly pay off their accounts in full and have in fact excellent credit ratings. And there’s the nub of the matter. Many of these customers are likely to be low profitability customers precisely because they do pay off their credit cards promptly. That means no revolving credit attracting interest charges. No late payment charges. No over the credit limit charges. And little or no profits.

I find it very difficult to believe that they have just spotted such a huge credit risk problem. Let’s not forget that Egg won a prize in 2006 for the excellence of its Credit Management System. Something smells fishy to me. It looks increasingly likely that Egg just decided to go with the easy ‘credit risk’ explanation to sell the firings to the public & press, rather than with the much harder ‘not making enough money from customers’ one. Egg is owned by US bank Citigroup, that recently wrote-off almost US$10 Billion in sub-prime losses. You can understand it if Citigroup needs to make savings. Even on uneconomic Egg customers. But the devil is in the detail of how these departing customers are managed. And I wonder how this stacks up with recent Treating Customers Fairly banking legislation.

We will have to wait and see if this turns into another public relations disaster like the Sprint 1,000 story in the USA? It’s not looking good for Egg so far!

What do you think? Is Egg suffering due to the credit risk of its customers? Or is it being economical with the truth about its uneconomíc customers?

Post a comment and get the conversation going.

Tip of the hat to BBC Radio 4.

Graham Hill
Independent CRM Consultant
Interim CRM Manager

Graham Hill (Dr G)
Business Troubleshooter | Questioning | Thoughtful | Industrious | Opinions my own | Connect with me on LinkedIn


  1. As a long-standing UK customer of Egg I am quite annoyed by their dishonest behaviour in this matter. My son-in-law uses his card for all his business expenses, and has an excellent credit rating, but his card has been stopped. Why? Clearly because he pays off the balance in full each month.
    Incidentally, so do I on mine, but my card hasn’t been stopped. Maybe that’s because I also happen to have $80,000 on deposit with them. But it won’t be there for much longer. I’m not staying with a company which behaves in this way.

  2. It’s getting harder for organizations to spin the news the way they used to, because its more likely that people will speak up through the Internet, or the BBC will find out about it as in this story about Egg.

    New research report by Aberdeen just out, reports that the Best in Class organizations are monitoring the Social Media and using it as an early warning system. And a key success factor is having the monitors be heard and acted upon by the organization.

    Dell’s chief blogger Lionel Menchaca was an eye opener for me, when I met him in October – the most heartfelt guy I had met in a long time, who really cared about customers – each company needs to have people like Lionel that they are willing to listen to, so they can really hear and act on what their customers need and want.

    And respond before the competition does, or the customers walk away in disgust like Fredsie is about to do.

    Mei Lin Fung
    Blog: Professionals Earn Customer Trust


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