Tuesday 12th February 2008
Following a complaint from a member of parliament, credit card provider Egg could be subject to a formal investigation, the Press Association (PA) reports.
Labour MP and former minister for consumer affairs Nigel Griffiths raised concerns after a number of Egg customers had their accounts cancelled.
The financial services provider argued that it was attempting to reduce the overall risk level of its customer portfolio.
However, many of the affected customers claim that they represent very little risk, having paid off their account in full regularly.
Now the issue has been forwarded to the Office of Fair Trading (OFT) by the Financial Services Authority.
Should the OFT see fit, Egg could become subject to a formal review of the reasons behind the move.
Mr Griffiths tells the PA: "I am very pleased about that - it shows just how seriously they are taking it."
"I cannot tell you the number of complaints I have had - they just keep flooding in," he adds.
Some 161,000 customers are reportedly affected by the move having received letters from Egg explaining the decision.
The credit card provider informed them that their account would be suspended following a 35-day waiting period.
But those involved - who constitute about seven per cent of the companys overall portfolio - have objected to the development.
As a result, Egg is facing accusations that it is acting not in the interests of lowering its risk profile but simply to eliminate unprofitable customers.
Last week, an Egg spokesperson responded to the issue, stating: "We are sorry that some of the 161,000 Egg credit card customers who we wrote to last month were upset by our decision."
The statement stresses that "it was not - as has been suggested - an excuse to exclude some unprofitable customers".
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