ING Direct 2011 Annual Report Download - page 173

Notes to the consolidated annual accounts of ING Group continued
defended vigorously; however, at this time, ING is unable to assess their final outcome. Therefore at this moment it is not practicable
toprovide an estimate of the (potential) financial effect.
Since the end of 2006, unit-linked products (commonly referred to in Dutch as ‘beleggingsverzekeringen’) have received negative attention
in the Dutch media, from Dutch Parliament, the AFM and consumer protection organisations. Costs of unit-linked products sold in the past
are perceived as too high and insurers are in general being accused of being less transparent in their offering of unit-linked products. The
criticism on unit-linked products led to the introduction of compensation schemes by Dutch insurance companies that have offered
unit-linked products. In 2008 ING’s Dutch insurance subsidiaries reached an outline agreement with all consumer protection organisations
to offer compensation to their unit-linked policyholders where individual unit-linked policies have a cost charge in excess of an agreed
maximum and to offer similar compensation for certain hybrid insurance products. At 31 December 2008 a provision was recognised for the
costs of the settlement. The costs were valued at EUR 365 million. A full agreement on implementation was reached in 2010 with one of
the two main consumer protection organisations. In addition, ING’s Dutch insurance subsidiaries announced additional (so-called ‘flanking’)
measures that comply with the ‘Best in Class’ criteria as formulated on 24 November 2011 by the Dutch Minister of Finance. In December
2011 this resulted in an agreement on these measures with the two main consumer protection organisations. Implementation has started;
our plan is to inform all unit-linked policyholders about compensation by the end of 2012. Neither the implementation of the compensation
schemes nor these additional measures prevent individual policyholders from initiating legal proceedings against ING’s Dutch insurance
subsidiaries. Policyholders have initiated and may continue to initiate legal proceedings claiming further damages. Because of the continuous
public and political attention for the unit-linked issue in general and the uncertain outcome of pending and future legal proceedings, it is
not feasible to predict or determine the ultimate financial consequences.
In January 2010 ING lodged an appeal with the General Court of the European Union against specific elements of the European
Commission’s decision regarding ING’s restructuring plan. In its appeal, ING contests the way the Commission has calculated the amount
of state aid ING received and the disproportionality of the price leadership restrictions specifically and the disproportionality of
restructuring requirements in general. In July 2011 the appeal case was heard orally by the General Court of the European Union.
On 2 March 2012, the Court partially annulled the Commission’s decision of 18 November 2009 and as a result a new decision must be
issued by the Commission. Interested parties can file an appeal against the General Court’s judgment before the Court of Justice of the
European Union within two months and ten days after the date of the General Court’s judgment.
In January 2011 the Association of Stockholders (Vereniging van Effectenbezitters, ‘VEB’) has issued a writ alleging that investors were
misled by the prospectus that was issued with respect to the September 2007 rights issue of Fortis N.V. (now: Ageas N.V.) against Ageas
N.V., the underwriters of such rights issue, including ING Bank, and former directors of Fortis N.V. According to the VEB the prospectus
shows substantive incorrect and misleading information. The VEB states that the impact and the risks of the subprime crisis for Fortis and
Fortis’ liquidity position have been reflected incorrectly in the prospectus. The VEB requests a declaratory decision stating that the
summoned parties have acted wrongfully and are therefore responsible for the damages suffered by the investors in Fortis. The amount
ofdamages of EUR 18 billion has not been substantiated yet. ING will defend itself against this claim; at this time ING is not able to assess
the future outcome. Therefore at this moment it is not practicable to provide an estimate of the (potential) financial effect of such action.
In July 2011, the Dutch ING Pensioners’ Collective Action Foundation (Stichting Collectieve Actie Pensioengerechtigden ING Nederland),
together with two trade unions (FNV Bondgenoten and CNV Dienstenbond) and a number of individual pensioners, instituted legal
proceedings against ING’s decision not to provide funding for indexing pensions insured with Stichting Pensioenfonds ING (the Dutch
INGPension Fund) per 1 January 2011. In July 2011, also the Interest Group ING General Managers’ Pensions (Belangenvereniging
ING-Directiepensioenen), together with a number of individual retired Dutch General Managers of ING, instituted legal proceedings
against ING’s decision not to provide funding for indexing Dutch General Managers’ pensions per 1 January 2011. It is not feasible to
predict the ultimate outcome of these legal proceedings although legal proceedings instituted by Stichting Pensioenfonds ING on the
same issue were ruled in ING’s favour. The ultimate outcome of these proceedings may result in liabilities and provisions for such liabilities
which are different from the amounts recognised. At this moment it is not practicable to provide an estimate of the (potential) financial
effect of such proceedings.
In addition to the foregoing procedures, ING Bank remains in discussions with authorities in the US concerning ING Bank‘s compliance
with Office of Foreign Asset Control requirements. ING Bank has received requests for information from US Government agencies
including the US Department of Justice and the New York County District Attorney’s Office. ING Bank is cooperating fully with the
ongoing investigations and is engaged in discussions to resolve these matters with the US authorities; however, it is not yet possible
toreliably estimate the timing or amount of any potential settlement, which could be significant. At this moment it is not practicable
toprovide an estimate of the (potential) financial effect.
In addition, like many other companies in the insurance industry, several of our U.S. companies have received formal requests for
information from various governmental and regulatory agencies regarding whether and to what extent they proactively ascertain whether
customers have deceased, pay benefits even where no claim has been made, and comply with state laws pertaining to unclaimed or
abandoned property. Companies may have to make additional payments to beneficiaries and escheat additional funds deemed
abandoned, and regulators may seek fines, penalties and interest. It is currently not practicable to estimate the (potential) financial effect
of such information requests.
1 Who we are 2 Report of the Executive Board 3 Corporate governance 4 Consolidated annual accounts 5 Parent company annual accounts 6 Other information 7 Additional information
171ING Group Annual Report 2011