The UK Fixed Income Plan 5

Transcription

1 The UK Fixed Income Plan 5 A six year fixed term investment providing a fixed income of either 5.75% (gross) once a year or 0.46% (gross) monthly. Your capital is not guaranteed and you may get back less than you invested. Offer open from 10 October 2011 to 2 December rbs.com/ukautopilotindex Plan/ISA Account Manager

2 Contents Key features of the UK Fixed Income Plan 5 4 Is the UK Fixed Income Plan 5 right for me? 10 How to apply 11 Important information 12 Plan Manager, ISA Manager and issuer of securities 19 Other important information 20 Contacts 21 Terms and Conditions 22 2

3 The UK Fixed Income Plan 5 You must read the whole of this brochure, including the Terms and Conditions, before applying. If there is anything you don t understand, you should speak to your adviser. We recommend you seek financial advice before investing in this Plan. We ll only accept applications on the basis that either a recommendation has been provided by a financial adviser or alternatively, if no financial advice has been given, a financial adviser has confirmed you have the necessary knowledge and experience to understand the risks of this Plan. This is a product that can put your capital at risk and you may lose some or all of your original investment. What are the roles of Legal & General and The Royal Bank of Scotland? The UK Fixed Income Plan 5 (the Plan ) is provided by Legal & General (Portfolio Management Services) Limited, a company authorised and regulated by the Financial Services Authority. Therefore where you see we or us in this brochure, it means Legal & General. As Plan Manager, we re responsible for the management of the Plan. An investment in the Plan would be a contractual agreement with us to purchase the underlying securities from The Royal Bank of Scotland plc ( RBS ) and then to ensure they are held on your behalf. We are available to answer any queries on your investment. See Contacts on page 21. In addition to this brochure, further information on the type of securities RBS issue, including those held in this Plan, is available in the RBS Prospectus. The Prospectus contains the full information and contractual terms for the securities. If you, or your adviser, would like to review the Prospectus before investing, an electronic copy is available on request from RBS or us, see Contacts on page 21. 3

4 Key features of the UK Fixed Income Plan 5 What is the UK Fixed Income Plan 5? The UK Fixed Income Plan 5 is a six year Plan that: provides you with a fixed income over six years; does not provide capital protection so you could lose some or all of your original investment; does not provide capital growth; invests your money in securities issued by RBS; ends on 22 December This is not a deposit fixed rate bond, which are available from banks and building societies. We ll use your money to buy securities, with a fixed maturity date, issued by RBS. The terms of the securities have been designed to give you both the income stated in this brochure as well as, at best, the return of your original investment at the end of the six years. Please see How does this Plan work? on page 5 for more information. The fixed income you receive is a percentage of your investment amount. You can choose one of the following income options: Yearly fixed at 5.75% gross/aer, you ll receive six income payments starting 24 December Monthly fixed at 0.46% gross (5.75% AER), you ll receive your first payment on 23 January Whether you get back your original investment in full or whether you lose some or all of your money at the Plan end date will depend on the performance of the FTSE 100 Index (the Index ). You will not be invested in the companies that make up the Index and the Index performance does not affect your income. Could I lose my original investment? As your original investment is not protected with this Plan, you could potentially lose some or all of it. 1. You will lose some or all of your investment at the end of the six year period if: the Index falls by more than 50% of the starting level on any day from the start date up to and including the Plan end date; and the Index is still below its starting level at the Plan end date. If this happens, the amount you get back will be reduced by 1% of your original investment for each 1% that the Index has fallen. Where the difference results in a fraction of 1%, the fraction will be applied. For examples of how changes in the FTSE 100 Index level could affect your investment return please see page The return of your original investment is dependent on RBS paying this money to us. This might not happen if they default or become insolvent and unable to repay us this money. If they don t repay us you could lose some or all of your original investment and, unlike a deposit account, you will not be entitled to compensation under the UK Financial Services Compensation Scheme. Therefore, your invested money is at risk and you could lose some or all of your original investment. 4

5 Could I lose my income? The payment of your income is dependent on RBS paying this money to us. In the event that RBS defaults or becomes insolvent you may not receive your future income payments. Can I access my money early? You must be prepared to keep your money invested for the full six years. However, you can ask to withdraw all of your money at any time. You should be aware that this would affect both: Your original investment. You might get back less than you originally invested. This will depend on the current value as determined by the issuer of securities (RBS) and this will be influenced by market conditions at the time. Any future income payments. You will not receive any further income payments. If you withdraw all of your money before the next income payment day you will not receive part payment for any time you have been invested since your last income payment. What charges and expenses will I have to pay? If you hold your investment for the full term, there are no charges for you to pay directly as they are already taken into account in the terms of your Plan. These charges won t be more than 4.0%, of your initial investment. How does this Plan work? When you invest in the Plan, we ll use your money to buy securities issued by RBS. The type of securities we buy for your Plan are called notes and are essentially a type of loan to a company with a fixed maturity date. The company that issues the securities agrees how much they will pay back and when, in return for this loan. In summary: you invest your money with us by 2 December 2011; on 22 December 2011 we use your money to purchase securities issued by RBS; these securities pay us the fixed income and we give that to you; on 22 December 2017 the securities use the FTSE 100 Index as a measure to determine how much of your original investment you ll get back at the end of the six years; we ll let you know how much has been paid back and ask you to confirm what you want us to do with this money. As you can see, the terms of the securities for this Plan have been designed to give you both the income as well as the return of some or all of your original investment at the end of the six years. These securities will be held on your behalf until the end of the Plan. There will be no further charges or fees during the term, unless this occurs as a result of tax or regulatory change. 5

6 What s my tax liability? The following tax assumptions are based on our understanding of current taxation in the UK and are subject to change. The value of any tax advantages will depend on your individual circumstances and where your money is invested. If you need tax or legal advice, please contact a tax or legal specialist. ISA investment including transfers An ISA in this product is a tax efficient stocks and shares ISA. Any income from this ISA will be treated as interest for tax purposes and will be free of income tax. Direct investment Any income will be treated as interest for tax purposes. We expect to pay any interest gross of any income tax that may be payable, depending on your personal circumstances. However, in particular circumstances we may be required to pay any income after deduction of income tax (currently 20%). We will let you know on payment if we have done this. If you are in receipt of age allowance, the interest could impact on your entitlement. If you are an investor residing abroad, depending on your residency status, you may be liable to pay tax in a country outside the UK. If you need advice, you should consult a suitable tax adviser or the tax authorities in the country concerned. Any income for Self Invested Personal Pension (SIPP), Small Self Administered Scheme (SSAS), corporate and registered charities will be treated as interest and paid gross. 6

7 What income will I receive? You can choose to take an income on a monthly basis or once a year over the six years. The table below shows how much income you could get each month at the fixed rate of 0.46%* gross (5.75% AER) or each year at the fixed rate of 5.75% gross/aer, on an example investment of 10,000. Original investment 10,000 Monthly Yearly Income received (gross) 46.00* Total income received over the six years (gross) 3,312.00* 3, *For simplicity, this rate has been rounded down to 2 decimal places and the income figures shown reflect this. Please note, the AER figure is based on the full income rate. AER stands for Annual Equivalent Rate. It shows what the rate would be if it was paid once each year. This lets you compare the income you can expect from your investment over time with other products. The gross rate is the rate payable before the deduction of tax. What is the FTSE 100 Index? In order to be able to pay this level of income, you need to understand that your original investment is not safe. We use the FTSE 100 Index to determine how much of your original investment you will get back at the end of the six years. This Index is made up of the largest 100 companies by market value listed in the UK on the London Stock Exchange. The share prices of these companies will change, so the level of the FTSE 100 Index will rise and fall. How is the FTSE 100 Index performance measured for this Plan? We ll use the level of the FTSE 100 Index at close of business on the start date of your investment, 22 December This gives us the starting index level. We ll then measure the level of the FTSE 100 Index at the close of business at the Plan end date. This is the final index level. We ll also measure the level of the FTSE 100 Index at close of business on every day during the six year term. This will then determine if you receive all your money back or not. Investment term and important dates Offer Available 10 October 2011 to 2 December 2011 You can only make an investment into the Plan during this offer period. ISA transfer deadline 18 November 2011 ISA investment deadline 2 December 2011 Direct investment deadline 2 December 2011 SIPP/SSAS investment deadline 2 December 2011 Start date of investment 22 December 2011 Investment term Six years Yearly interest dates 24 December 2012, 23 December 2013, 22 December 2014, 22 December 2015, 22 December 2016, 22 December 2017 Monthly interest dates Monthly, starting on 23 January 2012 and finishing on 22 December 2017 End date 22 December 2017 Your income payments are not dependent on the performance of the FTSE 100 Index. Your income will be paid regardless of how the FTSE 100 Index performs. 7

8 What do I get back at the Plan end date? Start date of the investment Starting index level (level of FTSE 100 Index at close of business on 22 December 2011). Is the final level of the FTSE 100 Index lower than the starting level at the Plan end date? Yes Has the FTSE 100 Index fallen by more than 50% of the starting level at any point up to and including the Plan end date? No No You get back your original investment. You get back your original investment. Yes You will lose some or all of your original Investment. The amount you get back will be reduced by 1% of your original investment for each 1% that the Index has fallen. Where the difference results in a fraction of 1%, the fraction will be applied. What could I get back at the end of six years? The table to the right shows how much of your original capital, using an example of 10,000 investment, you could get back at the end of the six year term. These two examples show the effect that differing final index levels may have on the return of your capital. We measure the Index level at close of business on every day during the six year term. One column assumes that the FTSE 100 Index level never drops below 50% of the starting index level up to, but not including the last day of the Plan. The other assumes the level has dropped below 50% of the starting index level at some point during the six years. Please bear in mind that the Plan does not provide you with growth on your original investment and this table does not include the fixed income payments you would have received over the six years. What you get back at the Plan end date Percentage change in the Index at the end of six years (from starting index level to final index level) The Index remains at a level equal to or higher than 50% of the starting index level up to but not including the last day of the Plan The Index is at a level lower than 50% of the starting index level on any day during the six year term +1% or more 10,000 OR 10,000 0% 10,000 10,000 20% 10,000 8,000 50% 10,000 5,000 70% 3,000* 3, % 0* 0 *This example shows what happens where the only time the Index falls by more than 50% is on the last day of the Plan. The above table only applies if you hold your investment for the full six years. If you sell your investment before the end of the six year term, you could get back substantially less than you originally invested. At the end of the fixed term RBS pay us any applicable return within seven working days (the maturity payment date). 8

9 How much can I invest? You can hold the Plan as a stocks and shares ISA and transfer any existing ISAs you have into it. You can also invest outside an ISA as a direct investment or within a pension plan such as a SIPP or SSAS. The Plan will only accept single contributions. The minimum and maximum amounts you can invest are: Investment type Minimum Maximum Stocks and shares ISA 5,000 10,680* ISA transfers 5,000 No maximum Direct investment 5,000 No maximum SIPP and SSAS 5,000 No maximum * Provided you haven t already used your ISA allowance for the tax year you are investing in. Subject to any limits in your SIPP or SSAS. Will I earn any interest when I invest before the securities are bought? When you invest we ll deposit your money in a client money account where, as long as the pre-investment interest rate is above 0%, you ll earn interest from the date your payment is treated as cleared until 19 December The current rate of pre-investment interest is 0.87% gross/aer. Any interest earned will be included in your total investment amount. What happens if I change my mind? Once we ve accepted your application we ll send you a cancellation notice. If you decide to withdraw from the offer, you ve 14 days from when you receive this notice to return the form to us, see Contacts on page 21. If you return the cancellation form to us and: we receive the notice before the securities are bought, you will have your investment returned without interest; the notice is received by us after the securities are bought, the value of the securities will be affected by market prices and the cost of selling the securities will be deducted, so you may get back substantially less than you originally invested. If your application includes an ISA and: you are cancelling an ISA transfer yet to be received by us, you will need to contact your existing ISA manager to stop the money being paid to us; you are cancelling an ISA transfer that has been paid to us, we will send you the money and you will permanently lose the ISA entitlement relating to that money. However, you could ask us to transfer your ISA to another provider from whom we would need to receive an ISA transfer request. Please also see ISA transfers on page 14. If you do not exercise your cancellation rights within the 14 day cancellation period then: you will remain invested in the Plan; you will be subject to all the risks as detailed in this brochure; if in an ISA, you forfeit your right to contribute to any other stocks and shares ISA with another manager for the tax year in which you make this investment; and if in an ISA, you won t be able to replace any contributions withdrawn within the same tax year, unless the amount you wish to invest is within your unused ISA allowance. 9

10 Is the UK Fixed Income Plan 5 right for me? Before deciding whether or not this Plan is right for you, you need to carefully consider the following. How long you re able to invest for What you want from your investment The risk of losing some or all of your investment and the effect it would have on your standard of living How your money is invested You can only invest in the Plan between the offer dates, 10 October 2011 to 2 December 2011 This is a six year investment and the Plan doesn t end until 22 December Do you have money set aside for emergencies? You ll receive a fixed income over the six years. You choose at the start whether you want your income yearly or monthly. Your original investment will not grow. The money you invest in this Plan is not protected. You could lose some or all of your money at the end of the term and what you get back will be determined by the performance of the FTSE 100 Index. If you need to take your money out early, you may get back less than your original investment. If RBS is unable to pay us, you may lose your original investment and any unpaid income. Unless the performance of your investment, including any income payments, meets or exceeds the rate of inflation, the real value of your investment will go down. You ll only be invested in securities issued by RBS. Have you considered your existing investment portfolio and what exposure you already have to similar products and also to RBS. You are not invested in the companies that make up the FTSE 100 Index. The minimum investment is 5,000 and you cannot make monthly payments. After 2 December 2011, you can t make any further investments. It s important that you think about spreading your money across different types of investments and so limit concentrating it in any one area. You could consider how and where different investments and products invest your money. Spreading your money into different investments can help reduce your risk. This Plan, known as a structured product, invests in securities from a single company, RBS. You need to consider how exposed your money is to the risks of both other structured products as well as other RBS linked investments you may hold. If you have any doubt you should talk to your financial adviser for more information. Please also see What if I ve any doubt about the suitability of this investment contract or require personal advice? on page 13. You should speak to your financial adviser if you re unsure about any aspects of this Plan and its suitability for you. 10

11 How to apply We recommend you seek financial advice before investing in this Plan. How to apply We recommend you seek financial advice before investing in this Plan. We ll only accept applications on the basis that either a recommendation has been provided by a financial adviser or alternatively, if no financial advice has been given, a financial adviser has confirmed you have the necessary knowledge and experience to understand the risks of this Plan. To invest in this Plan please complete the relevant application form. There is an ISA/ direct investment form and an ISA transfer form. SIPP and SSAS forms are available on request from your financial adviser. We must receive all applications by the date on the top of the appropriate application form. We must receive the proceeds for your investment before the end of the offer period. If proceeds are received after this date they won t be accepted and will automatically be returned to you if you re making a new investment, or to your existing manager if you re transferring an ISA. These dates are also listed on page 7 under Investment term and important dates. 11

12 Important information Who is the Plan Manager and who is the ISA Manager? Legal & General (Portfolio Management Services) Limited is the Plan Manager for your investment and your ISA Manager if you apply for an ISA in this Plan. As the Plan Manager and the ISA Manager, we issue and approve the Plan and are responsible for the management of the Plan. This means that we ll contact you once you ve invested and send you statements throughout the life of your investment. If you want to close your Plan, get a valuation or have any questions about the servicing of your investment, you should contact us. See Contacts on page 21. Why choose Legal & General? The Legal & General Group, established in 1836, is one of the UK s leading financial services companies. As at 30 June 2011, we were responsible for investing 370 billion worldwide on behalf of investors, policyholders and shareholders. We also had over seven million customers in the UK for our life assurance, pensions, investments and general insurance plans. Who is the underlying securities provider? The Royal Bank of Scotland plc ( RBS ) is the underlying securities provider, which means they issue the securities that are designed to give you the returns described in this brochure. An investment in the Plan is a contractual agreement that we, Legal & General (Portfolio Management Services) Limited, will buy the securities from RBS and ensure they are held on your behalf until the end of the fixed term. RBS has been rated A+, with a stable outlook, by Standard & Poor s, A2, with a negative outlook, by Moody s and AA-, with a stable outlook by Fitch (at the time of publication of this brochure). A stable outlook means that the rating is unlikely to change in the short term. A negative outlook means that the rating may be lowered in the near future. The securities however, aren t individually rated. See page 19 for more information on credit ratings and the credit rating agencies. Why choose RBS? RBS is a key participant in international financial markets, with a complete set of services in retail and corporate banking, financial markets, consumer, insurance, asset management and other financerelated activities. What returns could I receive? The specific details of your return can be found at the beginning of this brochure. Further information can be found in the Prospectus. This is available on request from RBS or us, see Contacts on page 21. You should be prepared to hold your investment for the full fixed term. 12

13 What are the risk factors? The returns provided by this Plan are achieved by exposing your capital to risk. This means that at the end of the investment term you may lose some or all of the original capital that you invested. This and the other main risks are explained in the key features section of this brochure. Other risks you need to be aware of include: RBS as issuer of the securities may withhold, defer, reduce or even terminate payments in certain events under the terms of the securities. As a result of this you may not receive all the income payments and get back less than you would otherwise or may have to wait for the proceeds. Please see `How is the return of my investment linked to the level of the FTSE 100 Index? on page 15 for further information. Unless the performance of your investment meets or exceeds the rate of inflation, the real value of your investment will go down. What you get back will depend on the level of the FTSE 100 Index, nothing is guaranteed. Past performance is no guarantee of future performance. If you use your right to cancel your Plan within the first 14 days you may get back less than the amount you ve paid in and you may lose your ISA entitlement for the current tax year. Please refer to What happens if I change my mind? on page 9. The Plan is not the same as a bank or building society account or instant access accounts where capital is readily available without penalty. Tax rules may change. What if I ve any doubt about the suitability of this investment contract or require personal advice? This brochure does not provide personal advice or recommendations. It s important that you only invest in this product if it meets your needs. This product is designed to be distributed by financial advisers only. Applications received in respect of this product must be based on a suitable investment recommendation provided by your financial adviser before you apply. If you have any doubt about the suitability of this investment, you should speak to your financial adviser. Who can invest? You must be aged 18 or over to apply. For ISA investments you must be resident and ordinarily resident in the UK for tax purposes. Details about residence and being ordinarily resident are available from your tax office or on HM Revenue & Customs website. ISA investments can be held in one name only. For direct investments into the Plan only, you can hold the investment in joint names. If you are investing jointly, we ll need all investors to sign the application form and also sign for all future transactions. For direct investments this Plan is not available to US residents. 13

14 How do I make an investment? You can invest in a stocks and shares ISA and/or as a direct investment within the Plan. You can also transfer any existing ISAs you hold. You can also hold the Plan within certain types of pension plans such as a SIPP or SSAS. Using your ISA allowance You can invest in this Plan within a tax efficient stocks and shares ISA. Any income you receive will be tax free if held in an ISA. There are two types of ISA, a cash ISA and a stocks and shares ISA. For the 2011/2012 tax year The total ISA limit for this tax year is 10,680. The maximum investment for a cash ISA is 5,340 and 10,680 for a stocks and shares ISA, but please note that the stocks and shares maximum includes any amount you may hold in a cash ISA. You can hold a cash and stocks and shares ISA with the same or different managers. This product is only available as a stocks and shares ISA. ISA transfers You can transfer any existing ISAs you hold into this Plan. You have to transfer a minimum of 5,000 but there s no maximum amount. We don t make a charge for receiving such transfers; however, you should check whether your existing manager will make a charge when you transfer. Your existing manager will cash in your investment according to their terms and conditions and send the transfer value directly to us for investment. We must receive the funds before the end of the offer period. If this date is missed, we ll return the funds to your existing manager. You won t benefit from any rise in the market generally while your transfer is being processed. You can transfer from a cash ISA to a stocks and shares ISA but not from a stocks and shares ISA into a cash ISA. If you start a cash ISA and transfer to a stocks and shares ISA in the same tax year, any amount you ve contributed will count towards your stocks and shares allowance rather than your cash allowance. If you re transferring an ISA taken out in the current tax year, you must transfer your whole ISA investment. Please also see page 9 What happens if I change my mind? Direct investment in the Plan If you ve used up your ISA allowance and would like to invest more, you can invest directly into the Plan. Any income will be subject to income tax. You need to invest a minimum of 5,000 but there is no maximum to the amount you can invest. If you invest in both an ISA and directly into the Plan, we ll treat them as two separate investments for administration purposes. For direct investments only, to help with your own administration, you can choose a reference (called a designation ) to help identify your investments. This may be useful if you want to hold the Plan for a specific purpose. Whatever the reason, you ll remain the owner of any referenced account. SIPP and SSAS investment We can accept investments from SIPPs (Self Invested Pension Plans) and SSASs (Small Self Administered Schemes). You will need to check eligibility with your provider. It s very important that you discuss your pension arrangements with your financial adviser to see if this option is right for you. You have to invest a minimum of 5,000 but there is no maximum amount (subject to any limits within your SIPP or SSAS). How is my money invested? Your money is used to buy securities with a fixed maturity date, issued by RBS. These securities have been structured so that they can give the Plan the returns that are described at the beginning of this brochure. We ll open an account in your name to ensure that you hold the rights to any stated benefits of the Plan, as described at the beginning of this brochure. Your securities will be registered along with those of other investors, in our name. You ll remain the beneficial owner. To ensure the safekeeping of your securities we may appoint a custodian to hold them on our behalf. No certificates will be issued. Before we buy the securities we ll deposit your money in a client money account. If the pre-investment interest rate is above 0% you ll earn interest from the date your payment is treated as cleared until 19 December Following our receipt of your application, payments by debit card will be treated as cleared after four business days and by cheque after one business day. This interest will be added to your account and will be included in your total investment amount. For ISA investments this interest will be subject to a deduction of 20%, which is paid to HM Revenue & Customs as tax. For non ISA investments, the interest will be paid gross. This will need to be declared to HM Revenue & Customs as taxable income on your self-assessment tax return. The amount will be shown on your statement. What documentation will I receive? Within six working days of our receipt of your application, we ll send you a welcome letter confirming receipt of your money and a notice giving you the right to cancel. We ll send you a contract note after the start date of the investment, showing your investment within the Plan. You ll receive a statement and valuation every year. If the FTSE 100 Index has fallen by more than 50% during the term of the Plan we ll notify you in your next statement. If you have invested in a Plan with joint holders, we ll send all correspondence to the first applicant, unless you request otherwise. 14

15 How is the return of my investment linked to the level of the FTSE 100 Index? The level of the FTSE 100 Index is only used to determine whether or not your original investment is paid back to you at maturity. The securities we buy from RBS have been designed to give the returns stated in this brochure, which are dependent on the level of the FTSE 100 Index. There is a risk during the term of the Plan that; the FTSE 100 Index may be cancelled, amended or replaced or the level of the FTSE 100 Index may not be calculated and announced as scheduled, or the level of the FTSE 100 Index can t be calculated because the relevant exchanges underlying the determination of the FTSE 100 Index fail to open for trading or close early or trading is suspended or limited or other disruptions to the exchanges occur. If any of these events occur, RBS as issuer of the securities is permitted under the terms of those securities to adjust the calculation of payments or defer payments under those securities. As a result you may have to wait longer for the proceeds. If an Extraordinary Event occurs this will result in circumstances beyond our reasonable control and we may not be able to perform our obligations set out in the relevant Terms and Conditions. This may result in any income payment due to you being disrupted, adjusted, reduced or delayed. If an Extraordinary Event occurs: if you are being disadvantaged we ll let you know as soon as we can, wherever possible; we will not be liable or responsible for any failure or delay in performing any of our obligations described in the relevant Terms and Conditions. Please refer to page 26 of the Terms and Conditions for a definition of Extraordinary Event. Can I cash in my investment before the end of the fixed term? You can sell the whole of your investment before the end of the fixed term, however, you could get back substantially less than you originally invested. Over the investment period, the value of your securities will depend on a number of factors, including the current market conditions. This value will be provided by RBS. Dealing will take place twice a month, as detailed in the Terms and Conditions. Please also see page 5 Can I access my money early?. If you would like to cash in your investment, or transfer your ISA, before the end of the fixed term you can do this by writing to us, with your instructions, at the address given in Contacts on page 21. We will deal with your request within five working days from receipt of your written instruction. Please note that you may not receive payment in your account until several days later. 15

16 What happens if I die? For direct share investments your investment won t automatically close. For Plans held in joint names, the Plan will continue in the name of the survivor. For Plans held in one name, when we receive proof of death and all other documentation needed to make a payment we will, based on the instruction of a nominated personal representative, either: a) repay the current value to your personal representatives; or b) transfer the investment to a named beneficiary(ies) to continue the investment until maturity. If this option is chosen, your beneficiary(ies) will receive and must agree to the relevant Terms and Conditions. For ISAs, your ISA automatically closes but your money remains invested in securities in a direct investment plan. Please note that any income in this Plan will continue to be treated as interest. When we receive proof of death and all other documentation needed to make a payment we will, based on the instruction of a nominated personal representative, either: a) repay the current value to your personal representatives; or b) transfer the investment to a named beneficiary(ies) to continue the investment until maturity. If this option is chosen, your beneficiary(ies) will receive and must agree to the relevant Terms and Conditions. Any tax credits received after the date of your death will be paid direct to HM Revenue & Customs and deducted from the proceeds of the sale. If you die before the end of the term, and the holding is not retained until that date, your personal representatives may get back less than the original investment, dependent on the current value as determined by RBS. If they get back more, any growth will be treated as a capital gain. What happens at the end of the fixed term? At the end of the fixed term RBS will work out whether you ll get back less than you originally invested (see page 4 Could I lose my original investment? ). They will then pay us, Legal & General (Portfolio Management Services) Limited, the applicable return within seven working days (the maturity payment date). On, or around, the maturity payment date we ll write to you setting out the options available to you. Once we ve received your instructions, we ll endeavour to fulfil them within seven working days of our receipt of your instructions. Please note that you will not receive payment in your account until several days later. Around the Maturity Date, we ll write to you outlining the options available to you. We will hold the proceeds of your Account in an interest bearing client account for at least three months until we receive your instructions. The interest rate on the account is variable and will be notified to you at maturity. All interest earned will belong to you. If we do not hear from you after three months, we may transfer the proceeds of your Account to a non interest bearing account and/or return the proceeds of your Account to your nominated bank or building society account. How much will any advice cost? We ll pay your adviser for any new investment. Your adviser will give you details of the amount that we will pay them. The amount of commission payable will be up to 3% of the amount you invest. These charges are already taken into account in calculating the return stated in this brochure. The amount will also be included in your welcome letter. How do we support advisers? We provide intermediary firms and advisers with additional benefits that are designed to enhance the quality of their service to you. These benefits may include some or all of the following: training, software, seminars and marketing materials. Further details of any benefits received from us are available on request from your intermediary firm or adviser. What s my customer category? We re required by our regulator (the Financial Services Authority) to categorise our customers to determine the level of investor protection they receive. If you buy products from this brochure you ll be 16

17 treated as a retail client, unless we agree otherwise. You can choose to be categorised as a professional client or an eligible counterparty, but this means you receive less information about our products and services. Also, you wouldn t be entitled to receive a suitability report or appropriateness assessment where these would be required for retail clients. If you are a professional client or eligible counterparty you can ask to be categorised as a retail client, although this does not necessarily mean you can refer any complaints to the Financial Ombudsman Service, and you may not be eligible for compensation under the UK Financial Services Compensation Scheme. Why do I need to prove my identity? To protect you and us from financial crime, we may need to confirm your identity from time to time. We may do this by using reference agencies to search sources of information about you (an identity search). This won t affect your credit rating. If this identity search fails, we may ask you for documents to confirm your identity. In certain circumstances, we may need to contact you to obtain more information regarding your investment. Maximum offer period We, Legal & General (Portfolio Management Services) Limited, may close an offer early or withdraw the product prior to the end of the offer period. This may happen if not enough money is received to make it viable, because the offer is over subscribed or, in the event of changes to market conditions, laws or regulation. If your application isn t accepted, your investment will be returned in full. Complaints If you wish to complain about any aspect of the service you receive from us, or would like us to send you a copy of our internal complaints handling procedures, please contact us. See the Contacts on page 21. If you have a complaint about the advice you have received, you should contact your financial adviser. Should you feel that your complaint is not dealt with to your satisfaction, you may be entitled to take the matter up with the: Financial Ombudsman Service South Quay Plaza 183 Marsh Wall London E14 9SR Making a complaint will not prejudice your right to take legal proceedings. Compensation You don t have the right to claim compensation against us, or from the Financial Services Compensation Scheme (FSCS), in relation to the poor performance of any underlying asset(s). Therefore, if the provider of the underlying assets (that is, The Royal Bank of Scotland plc) becomes insolvent, you will not be eligible to claim compensation. When you initially invest, before the start date and when your investment reaches the end of the fixed term, cash may be held in a client money account with a banking third party, currently The Royal Bank of Scotland plc, and whilst your money is held in this account it is covered by the FSCS. Your ability to claim from the FSCS and the amount you may be entitled to will depend on the specific circumstances of your claim. Most depositors, including individuals and small businesses, are covered by the FSCS. The FSCS covers the first 85,000 of each customer s claim against each bank or building society. Some banks and building societies operate under a number of trading names. The total FSCS compensation claim will include claims against all these trading names. If for any reason this money isn t held in a designated client account and we become insolvent, you may be entitled to compensation from the FSCS. Your ability to claim from the FSCS and the amount you may be entitled to claim will depend on the specific circumstances of your claim. The FSCS for investment business covers the first 50,000 of each customer s claim. You can find out more about the FSCS (including amounts and eligibility to claim) by visiting its website or calling

18 Where is my money held and how secure is it? Where is my money held? Is my money secure in the event that the bank/building society/securities provider holding my money becomes insolvent? Is my money secure in the event that Legal & General becomes insolvent? Does my money have the same security as a traditional savings account? Before the start date and after the end of the fixed term Your money is held on deposit in a client account with a bank or building society. This is currently The Royal Bank of Scotland plc. Yes, although any investment in this Plan will contribute towards your total claim against the bank or building society. If your total claim for compensation against The Royal Bank of Scotland plc is 85,000 or less, including the money you have put in this Plan, you should get back all of your money. If your claim is more than 85,000 in total, you may lose some or all of the money you hold in this Plan. The Royal Bank of Scotland plc operates under the trading names of The Royal Bank of Scotland, Direct Line, Lombard, the One Account, Child & Co, Drummonds and Holt s. The total FSCS compensation claim will include claims against all these trading names. Yes as your funds are held on deposit in the client account they are kept separate from Legal & General s funds. Yes. During the fixed term Your money is used to buy securities issued by The Royal Bank of Scotland plc. No, if the provider of the underlying securities, The Royal Bank of Scotland plc, becomes insolvent you will not be eligible to claim. Yes as your money is used to buy securities with The Royal Bank of Scotland plc, they are kept separate from Legal & General s funds. No. 18

19 Plan Manager, ISA Manager and issuer of securities Plan Manager and ISA Manager Legal & General (Portfolio Management Services) Limited Registered office: One Coleman Street London EC2R 5AA Registered in England No Legal & General (Portfolio Management Services) Limited is authorised and regulated by the Financial Services Authority (FSA). We re entered on their register under number You can check this at or by contacting them on Issuer of securities The Royal Bank of Scotland plc 250 Bishopsgate London EC2M 4AA Telephone Registered in Scotland No RBS are authorised and regulated by the Financial Services Authority (FSA). They are entered on the FSA register under number You can check this at or by contacting them on For further details on The Royal Bank of Scotland Group plc financial performance and shareholder information please visit Regulator The Financial Services Authority 25 The North Colonnade Canary Wharf London E14 5HS Marketing Agent SIP Nordic UK Limited Suite 3, Floor 2 20 Cathedral Yard Exeter, Devon EX1 1HB Telephone +44 (0) @sipnordic.co.uk Credit ratings agencies Standard & Poor s, Moody s and Fitch are independent ratings agencies that use their own research and analysis to provide a credit rating for an issuer of securities. Credit ratings can be a useful way to compare the credit risk associated with different product providers and related investments. Credit ratings are assigned by independent companies known as rating agencies and reviewed regularly. Moody s rate companies from Aaa (most secure/best) to C (most risky/worst), Standard & Poor s rate companies from AAA (most secure/best) to D (most risky/ worst) and Fitch rate companies from AAA (most secure/best) to D (most risky/ worst). These credit ratings are reviewed on a regular basis and are subject to change by these agencies. A ratings outlook indicates the likely rating trend over a one to two year period. It reflects financial or other trends that have not yet reached the level that would trigger the rating agency to change its rating of the product provider, but which may do so if such trends continue. A stable outlook means that the rating is unlikely to change in the short term. A negative outlook means that the rating may be lowered in the near future. The credit rating is not a recommendation to purchase, sell, or hold a financial obligation, as it does not comment on market price or suitability for a particular investor. It also does not provide assurance that the institution cannot fail. 19

20 Other important information Further details of this investment are in the Prospectus, an electronic copy of which is available on request from RBS (see page 19) or us, see the Contacts section on the next page. The Terms and Conditions, which are governed by English law, shall apply to an account as soon as it s accepted. In the event of any conflict between the ISA regulations and the Terms and Conditions, the former will prevail. The Terms and Conditions and all communications will only be available in English. All communications from us will normally be by letter or telephone. For IFAs requiring further marketing literature, please visit the RBS website at rbs.co.uk/ifa or phone +44 (0) or , @sipnordic.co.uk. Important information Please ensure that you read this brochure including the Terms and Conditions carefully. Neither Legal & General (Portfolio Management Services) Limited nor The Royal Bank of Scotland plc offer investment advice or make any recommendation regarding investments. This product is designed to be distributed by Financial Advisers. You are advised to take professional financial advice before you apply. ISA products are provided by, and the Plan is managed by, Legal & General (Portfolio Management Services) Limited, Registered office: One Coleman Street, London EC2R 5AA Registered in England No Legal & General (Portfolio Management Services) Limited is authorised and regulated by the Financial Services Authority, 25 North Colonnade, Canary Wharf, London E14 5HS. FSA Registration Number: The underlying securities provider is The Royal Bank of Scotland plc, Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB, United Kingdom. Member of the RBS Group. Registered in Scotland. Registered Number: The Royal Bank of Scotland plc is authorised and regulated by the Financial Services Authority, 25 North Colonnade, Canary Wharf, London E14 5HS. FSA Registration Number: The Royal Bank of Scotland plc s only role in the products described in this document is to provide the underlying securities to Legal & General (Portfolio Management Services) Limited. The provision of these securities is independent and separate to the management of the Plan. In particular, The Royal Bank of Scotland plc does not offer, provide, sponsor, or manage the Plan and does not accept any liability in relation to the issue, management and operation of the Plan. The product is not in any way sponsored, sold or promoted by any relevant stock market, relevant index, related exchange or index sponsor, and they make no warranty or representation whatsoever, express or implied, either as to the results to be obtained from the use of the relevant stock market and/or figure at which the relevant stock market, relevant index or related exchange stands at any particular time on any particular day or otherwise. They shall not be liable (whether in negligence or otherwise) to any person for any error in the relevant stock market, relevant index or related exchange and shall not be under any obligation to advise any person of any error therein. 20

21 Contacts You can write to us at this address, or call us on the number below, if you wish to obtain information, give us instructions, or have any queries or complaints. Legal & General Investments Customer Services PO Box 6080 Wolverhampton WV1 9RB Customer services Lines are open Monday to Friday 8.30am to 6.00pm. We may record and monitor calls. Calls to this number won t exceed your fixed line or mobile phone provider s national rate and will be included in any inclusive free minute plan or discount scheme you may have with your telephone provider. Call charges will vary between telephone providers. This number may not be available from outside the UK. 21

22 Terms and Conditions ISA and Securities Accounts Please read these Terms and Conditions carefully and keep them for future reference. They provide you with important information about the Plan and, together with the Plan brochure and the Issuer s Prospectus, they form the agreement between you and us. When you sign the Application Form you are agreeing to these Terms and Conditions. The law which we take as the basis for establishing relations with you prior to the conclusion of the agreement is also the law of England. 1. Definitions Application means the properly completed application form for investment into your Plan. Business Day means a day (other than Saturday or Sunday) on which commercial banks are open for business in London. Cha rg e means the charges for the Plan as detailed in the Key Terms and further described in Clause 14. Dealing Deadline means 5.00pm on both the 7th and the 20th of each month or where this is not a Business Day then the previous Business Day. For any investment held in cash (either before the Start Date, or after the Maturity Date) it means every Business Day. Final Interest Date means the last date on which interest is paid on investments made before the Start Date as set out in the Key Terms. HMRC means Her Majesty s Revenue & Customs. Income, means any income paid between the Start Date and Maturity Date as set out in the Key Terms and payable in accordance with Clause 7. Income Payment Date means the dates your Income will be payable in accordance with Clause 7 and the Key Terms. I s su e r means The Royal Bank of Scotland plc which issues the Securities and also carries out the calculations relating to the Securities. ISA means Individual Savings Account. ISA Account means your Plan account that is a stocks and shares ISA, which includes any ISA transferred from an existing ISA, under these Terms and Conditions and the Key Terms. ISA Regulations means The Individual Savings Account. Regulations 1998 as amended. Key Terms means the key terms which are set out on page 29. Maturity Date means the date on which a specific offering of the Product is due to mature. Maturity Payment Date means the date detailed in the Key Terms on which the Issuer will transfer the Maturity Payment to the Plan Manager. Maturity Payment(s) means the payment due on the Securities at the Maturity Date under the terms of those Securities. Payment means any lump sum payment made to the Plan, including in the case of an ISA Account, any ISA transfer value in accordance with the terms of the Application. The maximum and minimum allowable Payments into a Plan are detailed in this brochure. Pl a n means your Securities Account and/or your ISA Account, as selected in your Application, for the particular offering of the Product as covered by these Terms and Conditions and the Key Terms. Plan Manager, we, us or our means Legal & General (Portfolio Management Services) Limited. Plan Opening Period means the period during which we may accept Applications to make investments into a Plan as set out in the Key Terms, subject to Clause 3. Pro d u c t means the UK Fixed Income Plan 5. Related Company means any company in the same group of companies as the Plan Manager. Securities Account means your Plan account that is not an ISA contracted under these Terms and Conditions and the Key Terms. Securities means notes issued by the Issuer under the terms of the Issuer s prospectus. These certificates are structured to provide the investment return described in the brochure. Start Date means the date on which your investment is used by the Plan Manager to purchase the Securities on your behalf, as detailed in the Key Terms. Terms and Conditions means these terms and the Application. Transfer Amount means the value of an ISA transferred to us into an ISA Account, from another ISA manager, including transfers from a cash ISA. Written or in Writing means an instruction that you have signed. you and your means the individual(s), trustee or corporate body who has/have applied to open a Plan under these Terms and Conditions. 22