Internet bank gets Egg on its face again

Egg, the internet bank, has apologised to a saver after his account was wrongly credited with more than £300,000 of phantom cash. Simon Bunn, 32, opened his account just over a month ago. He was keen to save £20 a month into it and filled in a direct debit form so that this amount would be regularly transferred from his main bank account.

On April 12, when he logged on to check the £20 had gone in, he was "flabbergasted" to see just over £303,000 sitting in his account.

Mr Bunn sat there trying to work out what on earth had happened. Then it dawned on him that the figure paid in was the same as his main bank account number. What seemed to have happened was that the person processing his direct debit form had mistakenly keyed his account number into the value field instead of inputting "£20".

"In the end I realised it was not 'real money' - it didn't come from someone's account. It was just a silly mistake really. But it was annoying. I was up until the early hours fretting over it, thinking 'What am I going to do?' All kinds of things were going through my mind.

"I sent them an email to say 'What's happening?' "

Egg took the money out of his account on April 13. As the £303,000 had sat there for four days, Mr Bunn argued he should receive four days' worth of interest on this amount - about £200 - as a reward for his promptness in reporting the mistake. Instead, Egg offered him £20, which he accepted.

"They did apologise. They said they were glad I'd realised," says Mr Bunn, of Worthing, West Sussex, who works in the finance depart ment of a marketing company. "However, if they are going to make a silly mistake with an amount that large, they should face some kind of penalty charge." He was particularly surprised about the error bearing in mind that the maximum amount you can supposedly have in an Egg account is £250,000.

The experience has left Mr Bunn somewhat jaded and he is considering switching to Smile, the rival internet bank, which is offering a cash mini individual savings account paying 7.25%.

An Egg spokeswoman describes the incident as a one-off. "We're still looking into it," she adds. When someone opens an Egg savings account, they are sent a welcome pack which includes a form to set up a direct debit. "We haven't found the original form yet. In the absence of that we will assume it was an admin error on our part."

This isn't the first time that cracks have appeared in Egg's market-leading products. In December Jobs & Money revealed that the company had to reimburse scores of customers of its credit card after delays in processing transactions led to people being hit with penalty charges.

Other companies have also experienced problems with their online offerings. In November, the Halifax was forced to temporarily close its internet share-dealing service after a technical glitch led to worries that some customers had been able to access other people's accounts.

The Egg incident coincides with a warning from the Consumers' Association, which claims people should "think very carefully" before opening a savings account with internet bank First-e because it has not signed up to the UK's banking code of practice, and also doesn't belong to our banking ombudsman scheme.

First-e (www.first-e.com) a division of the French bank Banque d'Escompte, was launched last autumn and offers one of the highest no-notice savings rates on the market - 6.81% gross on balances of £1 upwards.

First-e says it would be delighted to subscribe to the banking code of practice and be part of the ombudsman regime, but under the UK rules this is not allowed. Banque d'Escompte is a member of the French Banks Association and is regulated by Banque de France

The spokesman adds that First-e is covered by the French national depositor protection scheme which gives people a higher level of protection that the UK scheme.