However, ING Direct's new customers need to remain vigilant as the provider has a track record of reducing the competitiveness of its savings rates once it has attracted new deposits.
Those with good memories will recall the launch of ING Direct back in May 2003 - it launched with a fanfare and the market-leading interest rate that saw it top the best buy tables until the end of 2005.
By that time, it had attracted more than one million customers. It then began to widen its margins at its customer's expense. During 2006 and 2007, the Bank of England increased Bank rate by 1.5 percentage points, yet ING Direct passed on only 0.5 points of that increase to its UK savers. It was heavily criticised in the press and savers deserted in droves. Since then, ING Direct's rates, while not being the worst, have not been market-leading.
In recent months its rate for new customers has looked more attractive again. Despite having promised to offer transparent accounts with no catches when it launched, it embarked on a new strategy last year. It now includes an introductory bonus for new customers. Its easy access account pays 6.50% but this includes a 12-month bonus. Once the bonus period ends, the rate drops to a much less competitive 4.75%.
And today, ING Direct has emerged as a hero once again. By taking over the savings accounts of Kaupthing Edge and Heritable Bank, it has provided customers with continuity and removed the need for them to claim compensation via the Financial Services Compensation Scheme (FSCS). ING Direct should be applauded for this. Customers with all three brands will now look to see what ING's interest rate policy will be going forward, but will it maintain the former Icelandic banks' market leading rates or will we see them aligned with those offered by ING Direct? We await with interest. Customers can rest assured that moneysupermarket.com will keep a close eye on events and inform you of any changes which result in the reduced competitiveness of these accounts.
ING is one of the world's largest banking institutions. It has more than £1trillion in assets and one of the highest credit ratings in the financial services industry: it is AA rated by Standard & Poor's. Therefore, ING Direct newly acquired customers don't need to be overly concerned about the bank's security. That said, what has been experienced in recent days highlights the fact that every bank, no matter how big, is risk-free. If the worst were to happen at ING, British savers are protected by the Dutch Investor Compensation Scheme. Under the scheme, customers receive £100,000 (about £77,000) of protection per person.
How ING Direct compares
|
Provider |
Easy Access |
|
ING Direct |
6.50%
includes 1.66% bonus for 12 months |
|
Kaupthing Edge |
6.55% |
|
Heritable Bank |
6.50%
includes 0.61% bonus for 12 months |
Sourced by www.moneysupermarket.com, October 8, 2008
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