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Banks Bias Towards ‘Risky Borrowers’
(11-02-08) - A senior MP has accused British banks of taking cards from reliable customers, and issuing cards to riskier customers in order to increase profits.
The chairman of the treasury select committee, John McFall, suggested that banks may be withdrawing cards from customers who consistently make their repayments on time.
Mr. McFall went on to describe how banks then issue cards to high risk customers who pay vast amounts of interest on uncleared debts.
He said: ‘Are we witnessing a situation where credit card companies are taking cards away from perfectly safe customers who pay their bill in full every month, and giving it to customers who are riskier?’
‘UK payments association APACS defended the banks and denied that any such policies have been introduced. According to APACS, banks have simply been ‘rationalising’ customer credit levels.
APACS spokesperson Jemma Smith defended the banks’ right to make changes as they see fit:
‘A credit card company is a business and it will always be looking to do one of two things: either making sure that it's lending money responsibly to people who can afford to repay any money that they're borrowing, and secondly, as a business that needs to make a profit, deciding whether it wants to give you and I a card’
She continues:
‘And at any time it may decide to take that business away.’
These murmurs of underhandedness by banks comes hot on the heels of Egg's(www.egg.com) announcement that they’re to withdraw credit cards from 161,000 of their customers thought to pose an unacceptably ‘high risk’.
Chris Eagle, Commercial Manager at CreditChoices, views these events as further evidence of the global credit meltdown:
‘As the global credit crunch tightens its grip on the economy there will be more speculation of the type described here. If these operations were conducted with a greater transparency then the industry rumours surrounding bank practices would be quelled.’
