Buyout of ING 'could limit choice'

Concerns have been raised that the Barclays agreement to buy ING Direct UK, whose products regularly appear on best buy tables, could result in less choice for consumers.

ING is credited with starting a "savings revolution" nearly a decade ago, and analysts said Barclays could use the deal to sharpen its existing offering. But others suggest that customers may choose to go elsewhere if ING Direct's consistently competitive product range is simply absorbed into that offered by Barclays.

For example, based on someone with £1,000 to save in an easy access account, ING Direct offers a savings account at 2.70% AER (annual equivalent rate) compared with the Barclays eSavings Reward account which offers 1.26% AER, moneysupermarket.com found.

A Barclays spokesman said the deal is still in its early days and it will take around two years before customers are fully integrated, when they will be contacted about exactly how the changes will affect them.

Sylvia Waycot, spokeswoman for website Moneyfacts, said: "Consumers are bound to be hit by less choice... and unless Barclays offers the high rates previously enjoyed on ING accounts, the average will become the norm and the exciting will become yesterday's dream."

Kevin Mountford, head of banking at MoneySupermarket, said: "ING started a savings revolution in the UK in 2003 with the launch of ING Direct, aggressively taking savings products online with market-leading deals designed to attract customers in the hope of cross-selling mortgage products, a strategy that was severely impacted by the credit crunch, resulting in a bailout by the Dutch government in 2008.

"Barclays will be able to offer multiple products to ING Direct customers, so the deal represents a great opportunity for it to grow its business in the longer term."

The announcement could have "major implications on the UK savings market", he said.

"Although ING Direct customers will switch over to Barclays on the same terms when the deal completes next year, there is no guarantee that they will remain on these terms in the long term, as Barclays is not known for competing for best-buy positions on savings. However, Barclays may use the deal to improve its online offering, upping the ante in the savings market in a similar way it has used the Woolwich brand for mortgages. Only time will tell."

The speed at which ING Direct has grown in the mortgage market was also recently noted by the Council of Mortgage Lenders (CML). The CML said in July that ING Direct was "by some distance" the fastest-growing lender in relative terms over the last two years. Ranked as the 10th largest lender, ING Direct advanced mortgages worth £3 billion last year, compared with £1.1 billion in 2010 and £100 million in 2009.