ING Direct 2013 Annual Report Download - page 217

Notes to the consolidated annual accounts of ING Group continued
Furthermore, ING Group leases assets from third parties under operating leases as lessee. The future rental commitments to be paid under
non-cancellable operating leases are as follows:
Future rental commitments for operating lease contracts
2014 242
2015 182
2016 153
2017 110
2018 81
Years after 2018 177
54 LEGAL PROCEEDINGS
ING Group companies are involved in litigation and arbitration proceedings in the Netherlands and in a number of foreign jurisdictions,
including the United States, involving claims by and against them which arise in the ordinary course of their businesses, including in
connection with their activities as insurers, lenders, broker-dealers, underwriters, issuers of securities, and investors and their position as
employers and taxpayers. In certain of such proceedings, very large or indeterminate amounts are sought, including punitive and other
damages. While it is not feasible to predict or determine the ultimate outcome of all pending or threatened legal and regulatory
proceedings, the Company’s management is of the opinion that some of the proceedings set out below may have or have in the recent
past had a significant effect on the financial position, profitability or reputation of the Company.
Because of the geographic spread of its business, ING may be subject to tax audits in numerous jurisdictions at any point in time. Although
ING believes that it has adequately provided for all its tax positions, the ultimate resolution of these audits may result in liabilities which are
different from the amounts recognised.
Proceedings in which ING is involved, include complaints and lawsuits concerning the performance of certain interest sensitive products
that were sold by a former subsidiary of ING in Mexico. Litigation was filed by the purchaser of certain ING Mexican subsidiaries who
claims that the financial condition of the subsidiaries was not accurately depicted. Parties have agreed to a settlement. The outcome of the
settlement is reflected in the 2013 Annual Accounts. Further, purported class litigation has been filed in the United States District Court for
the Southern District of New York alleging violations of the federal securities laws with respect to disclosures made in connection with the
2007 and 2008 offerings of ING’s Perpetual Hybrid Capital Securities. The District Court has dismissed all claims related to the 2007 and
2008 offerings. The plaintiffs appealed that decision relating to the 2008 offering. The appellate court affirmed the lower Court’s decision
dismissing all claims. The plaintiffs have petitioned the Court for an en banc review of that decision by the entire Court. An administrator
of an ERISA plan has filed a lawsuit seeking to represent a class of ERISA plan administrators claiming that an ING subsidiary has breached
certain of its ERISA duties. The District Court has granted the Administrator’s motion for class certification. The Court has conducted a
bench trial of the liability issues, which concluded on 3 October 2013 and the Court has taken the matter under advisement. These
matters are being 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 the Dutch Parliament, the AFM and consumer protection organisations. Costs of unit-linked products sold in the
past are perceived as too high and Dutch insurers are in general being accused of being less transparent in their offering of such 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 two main consumer
protection organisations to offer compensation to their unit-linked policyholders where individual unit-linked policies had a cost charge in
excess of an agreed maximum and to offer similar compensation for certain hybrid insurance products. At 31 December 2008 costs of the
settlements were valued at EUR 365 million for which adequate provisions have been established and of which a substantial portion has
been paid out. The remaining unpaid part of the provision as per 31 December 2013 is solely available to cover costs relating to the
settlements agreed in 2008. A full agreement on implementation was reached in 2010 with one of the two main consumer protection
organisations, with the second main consumer protection organisation signing its agreement in June 2012. In addition, ING’s Dutch
insurance subsidiaries announced additional measures (flankerend beleid) 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 additional agreement on these measures with the
two main consumer protection organisations. In 2012 almost all unit-linked policyholders were informed about the compensation. The
agreements with the two consumer protection organisations are not binding on policyholders. Consequently, neither the implementation
of the compensation schemes nor the additional measures offered by ING’s Dutch insurance subsidiaries prevent individual policyholders
from initiating legal proceedings against ING’s Dutch insurance subsidiaries and making claims for damages.
In November 2013, the so-called ‘Vereniging Woekerpolis.nl’, an association representing the interests of policyholders, initiated a
so-called ‘collective action’, requesting the District Court in Rotterdam to declare that NN’s Dutch insurance subsidiaries sold products in
the market, which are defective in various respects (e.g. on transparency regarding cost charges and other product characteristics, and
included risks for which the insurer failed to warn, such as considerable stock depreciations, the inability to realise the projected final policy
value, unrealistic capital projections due to difference in geometric versus arithmetic returns). ING’s Dutch insurance subsidiaries have
rejected these claims and will defend themselves in these proceedings.
215ING Group Annual Report 2013
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