Protected FTSE Bonus Plus Plan Your opportunity to benefit from potential growth in the FTSE 100 Index with capital protection at maturity

Transcription

1 H S B C G LO B A L M A R K E T S Protected FTSE Bonus Plus Plan Your opportunity to benefit from potential growth in the FTSE 100 Index with capital protection at maturity Plan/ISA Manager: Hedge provider:

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3 The Protected FTSE Bonus Plus Plan overview Your opportunity to benefit from potential growth in the FTSE 100 Index with capital protection at maturity. The Plan has three potential pay-offs: If the Final Index Level at maturity, subject to final year averaging, is below its start level investors receive their initial investment back, OR If the Final Index Level at maturity, subject to final year averaging, is at or above its start level investors receive their initial investment plus a bonus of 30%, OR If greater, investors receive 75% of the Index growth, subject to final year averaging, plus their initial investment Designed to return your capital in full if investment held for the full investment term* Five-year investment term Available for inclusion in a tax-efficient ISA Suitable for SIPP and SSAS investments Minimum investment of 5,000 Limited offer closes 24 October 2008 * Early encashment may lead to investors getting back less than their initial investment Protected FTSE Bonus Plus Plan 1

4 The Protected FTSE Bonus Plus Plan Who is the Plan provider? The Protected FTSE Bonus Plus Plan (the Plan ) and the Protected FTSE Bonus Plus ISA (the ISA ) are provided by Keydata Investment Services Limited (Keydata), a company authorised and regulated by the Financial Services Authority. As Plan Manager Keydata is responsible for the management of the Plan. An investment in the Plan would be a contractual agreement with Keydata to purchase securities from HSBC, the hedge provider, and then to manage the securities (see Key Features Document for details). What are the Plan options? Designed to return 100% of your capital if held to maturity plus growth potential The Plan is designed to allow investors to benefit from the potential growth of the FTSE 100 Index (the Index). Investors will get the higher of the following payoffs: If the Final Index Level, subject to final year averaging, is equal to or above its start level you will receive a bonus of 30%, OR If greater, you will receive 75% of the Index growth, subject to final year averaging The Plan s assets are capital protected securities linked to the Index. The securities are issued by HSBC Bank plc, whose long-term senior debt rating is Aa1(Moody s), AA (Standard & Poor s) as at 1 July The securities however, are not rated. A bank rated AA has very strong financial security with characteristics differing only slightly with those rated higher Source: Standard & Poor s. Key dates to remember: Plan open for subscriptions 15 September 2008 Deadline for ISA transfers 03 October 2008 Deadline for all other applications 24 October 2008 Start Date of Investment 7 November 2008 Investment Maturity Date 7 November 2013 Maturity Payment Date 21 November 2013 Final Year Averaging Dates (13 monthly points) 7 November November 2013 At the same time, investors have the reassurance of capital protection, meaning that if the Index does fall over the investment term, your original capital will be returned to you* provided you hold the Plan until maturity. This capital protection does not apply if you decide to encash the Plan before the end of the investment term. * Capital protection is subject to the issuer of the securities fulfilling its obligation. 2 Protected FTSE Bonus Plus Plan

5 ...More about the FTSE 100 Index The FTSE 100 Index (the Index ) is recognised as the benchmark index for UK-listed companies. The Index consists of the largest 100 UK companies by market value. Many of the companies in the Index are household names such as BP, Vodafone and HSBC Bank plc. The Index is rebalanced each quarter allowing companies that are growing to enter the 100 at the expense of companies whose share price may be falling, or underperforming its peers. Performance of the FTSE 100 Index Aug 03 Aug 04 Aug 05 Aug 06 Aug 07 Aug 08 When considering an investment in the Protected FTSE Bonus Plus Plan you should also consider the following: The returns from the Plan can differ from those achieved by investing directly into the underlying shares as the Plan pays a fixed Bonus of 30% or, if greater, 75% participation on the relative performance of the Index, subject to final year averaging, ONLY after five years The Protected FTSE Bonus Plus Plan does not benefit from dividend payments The Index may not grow at all during the term of the investment Performance of the FTSE 100 Index may turn out to be better than the return you will receive under the Plan If the Index rises significantly within the last 12 months of the investment, the Plan will only measure the average increase over this period Source: Bloomberg Past performance is not a reliable indicator of future returns. Protected FTSE Bonus Plus Plan 3

6 The Protected FTSE Bonus Plus Plan how the Plan works Low minimum investment and potential tax efficiency The minimum investment into the Plan is 5,000. You are not restricted to a maximum investment. Additionally the Plan can be included in a tax-efficient ISA or a pension plan such as a SIPP or SSAS, which have their own tax benefits. Speak to a financial adviser to learn more about these investment possibilities. What will you receive at the end of the Investment term? The returns are calculated by comparing the starting level of the Index and the level of the Index after five years. If the Final Index Level, subject to final year averaging, is at or above the Initial Index Level, you will receive a minimum return of 30% as a bonus, OR If greater, you will receive 75% participation of the performance of the Index over the investment term (subject to final year averaging) Pay-out structure of the Protected FTSE Bonus Plus Plan Performance of the Index** If the Final Index Level is below the Initial Index Level at maturity, subject to final year averaging, you will not receive any returns The product is designed to return your initial investment amount at maturity in all cases The Initial Index Level is the closing level of the Index on the Start Date of Investment. The Final Index Level is the average of the last 13 monthly closing levels of the Index during the final 12 months (See Key dates to remember page 2). The chart below exemplifies the pay-out structure of the Plan assuming that the Plan is held for the full investment period: Scenario 1: If the Final Index Level, subject to final year averaging, is below its starting point at the end of the investment term you will recieve your initial capital* and no returns. Scenario 2: If the Final Index Level, subject to final year averaging, is level or above its starting point you will receive a bonus of 30% plus your initial capital* OR, if greater Scenario 3: You will receive 75% of any growth of the Index, subject to final year averaging, plus your initial capital*. Scenario 3: Initial capital and 75% of Index growth Starting value Scenario 2: Initial capital and 30% bonus Scenario 1: Capital protection of initial investment Investment Period Maturity Date **Subject to final year averaging * Return of your initial capital is always subject to the issuer of the securities fulfilling its obligation. 4 Protected FTSE Bonus Plus Plan

7 Averaging The return of the investment includes averaging in the final year, recording the Index s level at 13 points each separated by one month (see Key dates to remember page 2). The average of these 13 points is used to calculate the Index s performance, rather than solely using the Index s level at the end of the five-year term. The use of averaging may protect against falls in the Index s level in the final months of the Plan s lifetime; it may also constrain the performance of the Plan should the Index show only positive performance in the final months of the last year and the Index level at maturity is higher than the average Index level in the final year. In this instance the calculation of the average of the last 13 monthly index levels may result in a lower return than if a single reading of the Index was taken at maturity. Currency hedging is not relevant here as the Index is declared in GBP. How do you make an investment? There are a number of ways you can invest in the Plan. Some of the options enable you to make the most of certain tax-free allowances, so it is important to consider your tax situation before investing and consult your financial adviser. Direct investment You can make a direct investment into the Plan subject to the minimum and maximum amount listed in the table opposite. Using your ISA allowance An ISA can be a tax efficient way of investing depending on your tax position. From April 2008 you can now invest in two separate types of ISAs in one tax year a Cash ISA and a Stocks and Shares ISA. The overall subscription limit for the 2008/2009 tax year is 7,200 of which up to 3,600 can be subscribed to a Cash ISA. You cannot subscribe to more than one of each type of ISA per tax year. The Protected FTSE Bonus Plus ISA is a Stocks and Shares ISA and is subject to the minimum and maximum amount listed in the table below. It is important to consider that ISA rules could change in the future and that the tax advantages of investing through an ISA may not be maintained. The minimum and maximum investment amounts are illustrated below. INVESTMENT METHOD Stocks & Shares ISA for 2008/2009* MINIMUM (FOR THIS PLAN) *Provided you have not already used your allowance for the tax year. Top up your ISA with direct investment If you wish to invest using your ISA allowance (minimum 3,600 and maximum 7,200 for 2008/2009) and would still like to invest additional amounts, you can invest outside your ISA investment with a direct investment. Please note, you must invest a minimum of 5,000 in the direct option. These will be treated as two plans for administration purposes. Other arrangements MAXIMUM 5,000 7,200* ISA Transfers 5,000 No maximum Direct Investment 5,000 No maximum The Plan is eligible for SIPP (Self Invested Pension Plan) and SSAS (Small Self Administered Scheme) investment. It is important you discuss your pension arrangements with your financial adviser if choosing this option. Protected FTSE Bonus Plus Plan 5

8 Investment scenario analysis The following table illustrates what you might receive from your investment if you remain invested in the Plan until the Investment Maturity Date based on a 10,000 investment. INITIAL CAPITAL PERCENTAGE CHANGE IN REFERENCED ASSET* 10, % 13,750 10, % 13,000 10, % 13,000 10, % 13,000 10,000 0% 13,000 10,000-10% 10,000 10,000-25% 10,000 *Subject to averaging in the final year TOTAL PROCEEDS INCLUDING YOUR INITIAL CAPITAL Please note: the above figures are examples only and changes in the Index Level have been chosen to demonstrate the potential returns under the Plan only. What you will get back depends on the performance of the underlying Index. You could get less than these example returns. Early redemption If you sell your investment before the relevant Investment Maturity Date, you may not receive the full amount you originally invested. The actual amount you will receive will depend on a number of factors, including the prevailing market conditions. Early encashment may result in substantial loss of capital. To apply You should seek professional financial advice before making any investment decisions. Having read and understood the full terms and conditions of the Plan, the Key Features document and rest of the brochure, simply fill in the Application Form that accompanies this brochure. Return it with your payment to Keydata at the address shown on the Application Form by the relevant deadline noted on page 2. Please make cheques payable to Keydata Client A/C if your cheque is from a building society, it should reference your name (e.g. Keydata Client A/C A Smith ). The key dates for application deadlines (see page 2) reflect those required by Keydata as Plan Manager. Where Application Forms are routed via your financial adviser, you will need to allow for a minimum of at least 2 extra days (check with your financial adviser). Is this Plan right for you? The Plan may be suitable if you: Want to get exposure to the most highly capitalised companies listed on the London Stock Exchange for the potential of capital gain Want to receive a minimum return of 30% if the FTSE 100 Index is equal to or better than its starting point at maturity, subject to final year averaging Want to get the potential benefit of an additional participation in the performance of the FTSE 100 Index, subject to final year averaging, if this is greater than the 30% bonus Understand that the product is designed to return your initial investment should you leave it invested for the complete investment term Are using the Plan as part of a diversified investment portfolio Want to avoid currency risk in your portfolio The Plan may not be suitable if you: Cannot remain invested for the full investment term Do not wish to have equity investment in your portfolio Need a regular income from your investment Are concerned about inflation eroding the value of your investment should the Plan underperform and you only get back your original capital Investors (who would be able to utilise UK Capital Gains Tax allowances) might maximise tax-free benefits by choosing an income product within an ISA wrapper 6 Protected FTSE Bonus Plus Plan

9 Who are the parties to the Plan? Hedge Provider HSBC Global Markets, part of HSBC Bank plc 8 Canada Square London E14 5HQ Telephone: Authorised and regulated by the Financial Services Authority. FSA registration number As the hedge provider, HSBC Bank plc is the issuer of the Securities designed to give investors back their capital and any growth, as detailed in the Key Features. HSBC is one of the world s largest banking and financial services providers. It delivers solutions in personal financial services, commercial, corporate and investment banking, and wealth and asset management to more than 128 million customers worldwide. HSBC s understanding of local cultures and markets worldwide lies at the heart of the financial services it offers clients. Their in-depth knowledge of global economies, sectors, industries and institutions allows them to deliver innovative solutions to clients needs. Through their global banking expertise and their skills in financial products design, planning and execution they empower their clients to take advantage of any growth opportunities in domestic, cross-border and emerging markets. HSBC s international network comprises over 10,000 offices in 83 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. With listings on the London, Hong Kong, New York, Paris and Bermuda stock exchanges, shares in HSBC Holdings plc are held by nearly 200,000 shareholders in some 100 countries and territories. In today s challenging conditions, HSBC is committed to helping all of its clients protect the value of their capital while taking full advantage of the investment opportunities available in world markets. Plan Manager Plans are established investment structures designed to give exposure to the performance of a specified underlying asset. The Plan is issued and approved by Keydata Investment Services Limited, who are authorised and regulated by the Financial Services Authority. FSA registration number Keydata Investment Services Limited Floor 8 Fountain House 2 Queens Walk Reading RG1 7QF Telephone: ISA Manager ISA products (tax-efficient savings vehicles) within the Plan are provided and managed by Keydata Investment Services Limited, who are authorised and regulated by the Financial Services Authority. FSA registration number Keydata Investment Services Limited Floor 8 Fountain House 2 Queens Walk Reading RG1 7QF Telephone: Protected FTSE Bonus Plus Plan 7

10 The Protected FTSE Bonus Plus Plan (the Plan ) and the Protected FTSE Bonus Plus ISA (the ISA ) The Financial Services Authority is the independent financial services regulator. It requires us, Keydata Investment Services Limited, to give you this important information to help you to decide whether our Plan and ISA is right for you. You should read this document carefully so that you understand what you are buying, and then keep it safe for future reference. 1. Plan aims To provide investors with: A return of either a 30% bonus as long as the Final Index Level, subject to final year averaging, is at or above its starting level at the end of the five-year investment term OR, If greater, 75% participation in the potential growth of the FTSE 100 (both options are subject to final year averaging) A full return of original capital at maturity 2. Your commitment The minimum investment is 5,000. You should be prepared to hold your investment for the full investment term until the Investment Maturity Date (see Key dates to remember page 2). 3. Risk factors Your capital protected amount is not guaranteed as there is a risk that the issuer may fail to meet its obligations. In addition, the terms of the investment may permit the issuer of those investments to withhold, defer, reduce or even terminate payments in certain events, as a result of which investors may receive less than they would otherwise or may have to wait for the proceeds. Please refer to the section Which Index is investment performance linked to for further information The value of your investment can go down as well as up and you may get back less than you invested in particular if you do not hold the plan through to the Investment Maturity Date (see Key dates to remember page 2) What you get back will depend on investment performance, nothing is guaranteed. Past performance is no guarantee of future performance If you cash in your Plan you may get back less than you originally invested because your investment grows less than illustrated Inflation will reduce what you could buy in the future Tax rules could change If you use your right to cancel your Plan within the first 14 days, and the value of your investment has fallen by the time we receive your instructions, the amount you get will be less than the amount you ve paid in. Please refer to the section Is this Plan right for you? on page 6 If you have invested via an ISA and subsequently decide to cancel, once you have passed the cancellation period it may not be possible to invest in another ISA for the relevant tax year in which you invested The Plan is not the same as a bank or building society account where capital is guaranteed, and with instant access accounts, is readily available without penalty 8 Protected FTSE Bonus Plus Plan

11 4. Questions and answers Who can invest? UK investors aged 18 and over can invest via an ISA or the Direct Investment option. Investments can also be made through the Direct Investment option on behalf of a person under the age of 18. You can also transfer existing ISA investments from other Plan Managers. How do I invest? You should discuss with your Financial Adviser before making any investment decisions. Once you have decided to invest and have read and understood the brochure, the Key Features document and the Terms and Conditions, complete and sign the relevant sections of the Application Form. The completed Application Form and cheque should be sent to your Financial Adviser or to Keydata Investment Services, Fountain House, 2 Queens Walk, Reading, RG1 7QF. What documentation will I receive? Within five working days of receipt of your application, we will send you an acknowledgement which will include details on your right to cancel. Within 25 business days, following the Start Date of Investment into the Securities, which provide the Plan returns, a statement showing your investment within your Plan will be sent to you. Every six months thereafter, you will receive a statement and valuation of your investment. This will be issued within 25 business days of the Plan s six month investment anniversary. You can also request statements every three months should you require them more regularly. All investments will be registered in the name of the nominee company Keydata Investment Product Nominees Limited or other such nominee approved by the Plan Manager, although your holding is recorded and separately identified by us. No certificates will be issued. Is there any benefit in investing early into the Plan? You will benefit from an early investment bonus of an amount equivalent to that of a publicly offered deposit account with a high street bank selected by the Plan Manager (less tax where appropriate) from the date your funds clear until two business days prior to the Start Date of Investment (see Key dates to remember page 2). This interest once rounded down to the nearest whole pound, plus your initial investment, will then be invested into your investment option as appropriate. Protected FTSE Bonus Plus Plan 9

12 Which Index is investment performance linked to? Your investment is linked to the FTSE 100 Index The Index. The Index contains the 100 largest UK companies by market capitalisation. The Index is a capital-only index. Investors will not benefit from any dividends paid by the companies which are comprised in the Plan over the investment term. The returns from the Plan may not be the same as what you would receive if you invested directly in shares of the companies in the Index, as returns from shares include dividends, which are not added to the Plan. Capital protection is available if the product is held through to the end of the investment term. There is a risk that the Index may be discontinued, amended or replaced during the term of the Plan. If any of these events occur, the issuer of the investments may be able to amend the terms of those investments or defer payments under those investments. In addition, the calculation agent for those investments may be able to determine the amount payable without referring to the discontinued or disrupted index. As a result, investors may receive less than they would otherwise or may have to wait for the proceeds. What is my capital invested in? The investments that we will purchase for you will be Securities with a fixed maturity issued by HSBC Bank plc. They have been structured to match the investment objectives of your Plan. What are my potential total returns? The following table illustrates what you might receive from your investment if you remain invested in the Plan at the Maturity Investment Date based on a 10,000 investment. INITIAL CAPITAL PERCENTAGE CHANGE IN REFERENCED ASSET* 10, % 13,750 10, % 13,000 10, % 13,000 10, % 13,000 10,000 0% 13,000 10,000-10% 10,000 10,000-25% 10,000 *Subject to averaging in the final year These figures are only examples and are not guaranteed What you will get back depends on the performance of the underlying Index You could get less than these example returns Do not forget that inflation will reduce what you could buy in the future with the amounts shown What is my tax liability? TOTAL PROCEEDS INCLUDING YOUR INITIAL CAPITAL If you have invested via an ISA, all investment returns from your Plan are currently free of UK income tax and capital gains tax. Investors may be subject, depending on their personal circumstances, to capital gains tax on any arising gains on the disposal of their Securities. 10 Protected FTSE Bonus Plus Plan

13 The previous comments are intended as general guidance only and apply to investors who are resident or ordinarily resident in the United Kingdom for tax purposes, who invest in the Plan as an investment and not in the course of trade and are beneficial owners of the Securities at all times prior to the sale or exercise of the Securities. The comments are based on our understanding of current UK tax legislation and published HM Revenue & Customs practice in force at the date of this document going to print. Tax law and practice and any change could be applied retrospectively. If you are in doubt about your tax circumstances, please contact your professional adviser. Will I receive income? Your Plan is designed to provide growth only; no income will accrue or be paid during the investment period. What about my capital repayment? The rise or fall in the Index is measured by comparing the Final Index Level and the Initial Index Level. As long as the Final Index Level, subject to final year averaging, is at or above the Initial Index Level you will receive the higher of a 30% bonus OR 75% participation in the potential growth of the Index. The Initial Index Level is the closing level of the Index on the Start Date of Investment. The Final Index Level is the arithmetic average of the Index value taken over the last 12 months of the investment term (13 monthly observation points). The Index value at each of these points is determined with reference to the closing level of the Index on each of these dates (see Key dates to remember page 2). The use of averaging may protect against falls in the Index on a specific date, it may also significantly constrain the performance of the Index as used to calculate the return of the Plan. Accordingly, the calculation of the average of the last 13 monthly levels may result in a lower return than if a single reading of the Index was taken at maturity. You will receive your full original investment if held until the end of the investment period irrespective of the performance of the Index (subject to the issuer of the securities fulfilling its obligation). How will charges and expenses affect my investment? The anticipated charges for this Plan will not exceed 4% of your investment. There will be no further charges to pay during the term, other than an administration fee of 150+VAT for any surrenders or transfer of an ISA to another manager, unless we feel it is necessary to take into account significant regulatory changes. These charges and expenses are reflected in the returns shown. How much will any advice cost? If you receive advice from an Independent Financial Adviser they will give you details about the cost. If you are not taking advice commission may still be payable to an Independent Financial Adviser. The amount of commission payable will be 3% or 0.60% per annum on the amount you invest. The amount will also be included in your welcome letter. Commission is already accounted for in the terms offered and does not affect the return shown. What happens if I change my mind? You will have the right to cancel your Plan within 14 days of receiving from us a notice of your right to cancel. Withdrawal notices, which Keydata receives prior to the Start Date of the Investment (see page 2), will receive a full return of the initial investment. No early bonus interest will be paid on cancellation. However, you should note that for notices received on or after, the Start Date of the Investment, you cannot reclaim a full refund of Protected FTSE Bonus Plus Plan 11

14 your investment if the price at which assets within the Plan were purchased have fallen at the time you elect to cancel your investment. In these circumstances a cancellation administration fee of 150+VAT will be deducted. Also, the cash value is not guaranteed and will depend on prevailing market conditions including, but not limited to, interest rates and the levels of the Index. As all charges are reflected in the terms offered, the value of your investment is likely to be less than the amount originally invested in it for a substantial part of the investment period. If you exercise your right to cancel your Plan following an ISA transfer, and either request the funds or your previous ISA Account Manager will not accept the return of these funds to them, you will irrevocably lose any favourable tax treatment associated with that ISA holding. Can I withdraw before the end of the term? Yes you can, although should you decide to sell or transfer your investment any time within the term you are likely to receive less than you originally invested, particularly during the early years of the plan. Please refer to How will charges and expenses affect my investment? Can I make a partial withdrawal before the end of the term? No partial withdrawals are permitted from your Plan. How do I sell my investment? If you decide to sell your investment you should contact us to arrange it. Given the nature of the investment, it is possible that you may get back significantly less than you originally invested if you sell before the end of the investment term. If I am considering an ISA transfer, is there anything else I should know? To complete an ISA transfer your existing Plan must be transferred in cash, which means that your existing Account Manager will sell your investment holdings. Your existing Account Manager may charge you an exit or transfer fee. There is the potential for loss of income or growth, if markets should rise, while your transfer remains pending. Please note that to ensure that the funds are received from the existing Account Manager in a timely manner, we have a deadline for ISA transfers (see Key dates to remember page 2). We then ask your existing Account Manager to credit funds to us by five working days prior to the Start date of the Investment see page 2) at the latest. If this date is missed, it may not be possible to reinstate your ISA with your previous Account Manager. 12 Protected FTSE Bonus Plus Plan

15 What happens if I die? Should you die and your personal representative or beneficiaries request that your holdings are sold, an administrative charge of 65+VAT will be levied. The total value of your investments forms part of your estate for inheritance tax purposes. ISAs automatically lose their tax free status on the death of the holder. No charge is applied if the Plan is assigned to a beneficiary. How to contact us: If you require further information or an up to date valuation, on your Plan please contact us. Please note, we may monitor calls to improve our service. Client Services: Keydata Investment Services Limited Floor 8 Fountain House 2 Queens Walk Reading RG1 7QF Switch Board: client.services@keydata.co.uk Other information How to complain: All formal complaints should, in the first instance, be made to the Compliance Officer at Keydata Investment Services Ltd, Floor 8, Fountain House, 2 Queens Walk, Reading RG1 7QF. In addition, and if you are not happy with our response, you have the right to complain directly to the Financial Ombudsman Service at the following address: Financial Ombudsman Service, South Quay Plaza, 18 Marsh Wall, London E14 9SR. Telephone: Please note that making a complaint will not prejudice your right to take legal proceedings. A statement describing our complaints handling procedure is available on request. Compensation scheme: Should Keydata Investment Services Limited become insolvent, compensation may be available from the Financial Services Compensation Scheme, 7th Floor, Lloyds Chambers, Portsoken Street, London E1 8BN. Telephone: A statement describing your rights to compensation is available on request. The amount and scope of the compensation scheme, being 100% of the first 30,000 invested and 90% of the next 20,000 invested, making a maximum compensation amount of 48,000. Standard & Poor s: The Standard & Poor s credit rating is a current opinion of an institution s overall financial capacity (its creditworthiness) to pay its financial obligations. 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. Protected FTSE Bonus Plus Plan 13

16 Terms and Conditions 1. Definitions: In these terms the following words mean: Plan Protected FTSE Bonus Plus Plan Plan Manager Keydata Investment Services Limited FSA The Financial Services Authority is a non-governmental body given statutory powers by the Financial Services and Markets Act 2000 Start Date of Investment see Key dates to remember page 2 Maturity Payment Date see Key dates to remember page 2 ISA Individual Savings Account Keydata Keydata Investment Services Limited Regulations The Individual Savings Account Regulations 1998 Securities Medium Term Notes or Warrants issued by a financial institution Issuer The financial institution which issues the securities and acts as calculation agent, HSBC Bank plc We, us & our Keydata Investment Services Limited, which is authorised and regulated by the Financial Services Authority You and your An investor who applies to open a Plan Referenced Asset FTSE 100 Index 2. Your Plan: i. If applicable you may open more than one Plan. ii. The Application Form you use is part of these Terms and Conditions and if the terms differ, those contained in our Application Form will prevail. iii. On the receipt of a duly completed Application Form and subscription(s), the Plan Manager may accept your investment subject to these Terms and Conditions. The Plan Manager reserves the right to reject an application for any reason. iv. In the case of an ISA investment, your Plan will be opened upon receipt by us of a duly completed application together with your initial cash subscription. Subject to the Regulations we may open a Plan provisionally where the information which you have supplied is insufficient. In respect of an ISA, where we open a Plan on a provisional basis you must supply the missing information within 30 days, otherwise the Plan must be avoided in accordance with HM Revenue & Customs requirements. v. In the case of an ISA transfer, we will manage your Plan upon receipt by us of the proceeds of your previous ISA from your previous Account Manager. vi. You are classified as a retail client within the meaning of the FSA Handbook unless we specify otherwise in correspondence with you. vii. Your Plan will have the features including the investment returns and risks described elsewhere in this document. 3. Cancellation rights: You will have the right to cancel your Plan within 14 days of receiving from us a notice of your right to cancel. Withdrawal notices, which Keydata receives prior to investment on the Start Date of the Investment, will receive a full return of the initial investment. No early bonus interest will be paid on cancellation. However, you should note that for notices received on or after the Start Date of the Investment, the date on which securities will be purchased, you cannot reclaim a full refund 14 Protected FTSE Bonus Plus Plan

17 of your investment if the price at which assets within the Plan were purchased have fallen at the time you elect to cancel your investment. In these circumstances a cancellation administration fee of 150+VAT will be deducted. Also, the cash value is not guaranteed and will depend on prevailing market conditions including, but not limited to, interest rates and the levels of the Referenced Asset. As all charges are reflected in the terms offered, the value of your investment is likely to be less than the amount originally invested for a substantial part of the investment period. If you exercise your right to cancel your Plan following an ISA transfer, the proceeds will be paid direct to you and you will irrevocably lose any favourable tax treatment associated with that ISA holding. 4. Subscriptions: You must subscribe to the Plan with your own cash or by transfer of cash from an existing ISA. Once the ISA has been transferred, your ISA Plan will be subject to these Terms and Conditions. 5. Permitted investments: The Securities available under the Plan are either warrants for direct investments denominated in sterling or Medium Term Notes for the purposes of ISA investments. The returns on both Securities are structured to deliver returns based upon the performance of the Referenced Asset. Your investment objective is to invest in these Securities. 6. Cash held within your Plan: Cash will be held in a pooled Keydata Client Account with a bank (which is not an associate of the Plan Manager). Interest earned on cash deposits will be credited to your Plan in accordance with client money rules of the Financial Services Authority. Interest will first be rounded down to the nearest whole pound immediately prior to investment in the permitted investments. The Plan Manager may benefit from the aggregation of client balances held, but the rate of interest you will earn will not be less than the publicly-offered deposit account with a high street bank selected by the Plan Manager. Within an ISA, cash can only be held pending an investment and if held in cash over a prolonged period there is a risk that HM Revenue & Customs may void your ISA. 7. Investment: All cash (and interest earned prior to the Start Date) received by us for investment in your Plan will be applied to purchase Securities. Investment will be made on or before the Start Date of the Investment. The Plan Manager will be responsible for all purchases and sales of investments for your Plan. The Plan Manager may aggregate any transaction for an investor with one or more transactions for other investors; even though this may result in a less favourable price than if it had been carried out separately. The Plan Manager will take all reasonable steps to ensure that any aggregated transaction is carried out on the best terms generally available in the market at that time for transactions of a similar type and size. You have a right to inspect copies of contract notes, vouchers and entries in the Plan Manager s book, or computerised records relating to transactions carried out for your account. These records will be kept for at least six years. The final capital repayment will be credited directly into your Plan on or around the Maturity Payment Date. 8. Securities: By signing the Application Form, you have chosen to make an investment with the features (including the potential returns and risks) described elsewhere in this document. Your investment will be used to acquire Securities, which are designed to fund the investment returns offered by the Plan, as detailed in the Key Features. Protected FTSE Bonus Plus Plan 15

18 9.Tax treatment: Where Securities are held within an ISA Account any gains or losses on your investment will not be subject to UK Capital Gains Tax. Investors may be subject, depending on their personal circumstances, to capital gains tax on any gain arising on the disposal of the Securities. The above comments are intended as general guidance only and apply to investors who are residents or ordinarily residents in the United Kingdom for tax purposes, who invest in the Plan as an investment and not in the course of a trade and are beneficial owners of the Securities at all times prior to the sale or exercise of the Securities. The comments are based on our understanding of current UK tax legislation and published HM Revenue & Customs practice in force as at the date of this document going to print. Tax law and practice could change and any change could be applied retrospectively. If you are in doubt about your tax circumstances, please contact your professional adviser. 10. How investments are held: All assets within your Plan will be, and must at all times remain, in your beneficial ownership, and must not be used as security for a loan. None of the assets may be lent to or deposited by way of collateral with any third party, nor may you create any charge or security over any assets. We may not lend any of your assets to a third party, nor may we borrow against their security. Securities will be registered in the name of our nominee company, Keydata Investment Product Nominees Limited, which is not authorised under the Financial Service and Markets Act 2000, or any such nominee approved by us. We accept full responsibility for any loss that might arise as a result of any default by any nominee company in which name the assets are held. 11. Conflicts of interest: The FSA Principles of Business, stipulate that a firm must manage conflicts of interest fairly, both between itself and its customers and between one customer and another. Keydata has a Conflicts Policy which fully meets this requirement. Keydata will identify conflicts and ensure these are properly managed in a fair manner. Procedures are already in place to monitor activities which could give rise to such a conflict. A copy of the Keydata Conflicts Policy is available on our website or on request. 12. Documents you receive: We will acknowledge in writing within five working days from receipt of your application(s). Within 25 business days, following investment into the Securities which provide the Plan returns, a statement showing your investment within your Plan will be sent to you. You will also receive a statement every six months prepared on the six month anniversary of the Start Date, each year. This will show details of all transactions affected during the previous six months and include a valuation of your Plan. The statement will be prepared in accordance with the rules of the FSA and will be issued within 25 business days of the valuation date and will not include any measure of comparative performance. You can also request statements every three months should you require them more regularly. We may produce a consolidated statement covering where applicable (i) all ISAs that are held with us; and (ii) an investment statement covering all Direct Investments held with us. 16 Protected FTSE Bonus Plus Plan

19 13. Withdrawal: No partial withdrawals are permitted from your Plan. 14.Transfer to another manager: Subject to the Regulations, you have the right at any time to transfer your ISA to another ISA Manager. To effect a transfer you must submit to us a written instruction and/or a letter of acceptance from your new ISA Manager. You may stipulate when you wish to transfer the proceeds of your Plan, but should be aware your Plan s proceeds will be realised in accordance with clause 15. We only effect the transfer in cash following the sale of all securities held by you. In accordance with the Regulations, if you wish to transfer an ISA for the current year, the transfer must be effected in respect of all the subscriptions made that year. In relation to ISAs opened in respect of a previous year, the transfer must be effected in respect of all holdings held in that year s Plan. No partial transfers will be allowed. 15.Termination: The Plan may be terminated immediately by the Plan Manager on giving written notice to you if, in its opinion, it is impossible to administer the Plan in accordance with the Regulations or you are in breach of the Regulations. (The ISA Plan will terminate automatically if it becomes void under the Regulations with immediate effect. The Plan Manager will notify you in writing if an ISA Plan becomes void.) The Plan Manager may terminate the Plan on one month's notice if you fail to pay any money due or are in breach of any of these Terms and Conditions. The Plan Manager may at any time terminate the Plan by giving you three months notice to that effect. You may terminate the Plan at any time by giving written notice to the Plan Manager that you wish to terminate your Plan. Following receipt, the Plan Manager will then sell your investments at the next practicable dealing date, normally mid month and month end. As with transfers, you may stipulate when you wish to realise the proceeds of your Plan, but be aware that dealing usually occurs twice monthly as above. Protected FTSE Bonus Plus Plan 17

20 Keydata must receive written notice of termination no later than two business days prior to the dealing date. On termination, the Plan Manager will account to you for the proceeds of investments and will be entitled to retain any cash or investments required to settle any transactions already initiated on your behalf and any outstanding fees. You will pay to the Plan Manager any fees and transaction charges accrued to the date of termination. 16. Death: Should you die and your personal representative or beneficiaries request that your holdings are sold, an administrative charge of 65+VAT will be levied. The total value of your investments forms part of your estate for inheritance tax purposes. ISAs automatically lose their tax-free status on the death of the holder. 17. Charges: The Plan is designed to be held for the full term. Should you subsequently withdraw at any time during the investment period, a withdrawal administration fee of 150+VAT will be deducted. Also, the cash value is not guaranteed and will depend on prevailing market conditions including, but not limited to, interest rates and the levels of the Referenced Asset. As all charges are reflected in the terms offered, the value of your investment is likely to be less than the amount originally invested in it for a substantial part of the investment period. In addition we will benefit from the rounding of interest as per clause 6. However we reserve the right to introduce an additional charge in the future to cover any additional expenses incurred by us as a result of significant regulatory change. In any event no such charge will be introduced without giving you three months written notice. 18. Records of your Plan: We will (a) maintain all such records relating to your Plan, (b) make such returns to HM Revenue & Customs for the purposes of taxation, and (c) provide all taxation details to you, as may be required under the Regulations. 19. Delegation of functions: We may appoint a third party to act in respect of any function relevant to administration of your Plan, though we must satisfy ourselves that any such third party is competent to carry out those functions or responsibilities. We shall take full responsibility for the actions and omissions of any such third party. 20. Assignment: We may appoint another company to be the Manager of your Plan under these Terms and Conditions on giving you one month s notice. The new Manager must be approved to act as an ISA Manager by the Commissioners of HM Revenue & Customs. 21. Complaints: Any complaint should be addressed to the Compliance Officer, Keydata Investment Services Limited, Floor 8, Fountain House, 2 Queens Walk, Reading RG1 7QF in the first instance. If you are not satisfied with the manner in which the matter is addressed you can refer your complaint to The Financial Ombudsman Service at South Quay Plaza, 18 Marsh Wall, London E14 9SR. Making a complaint will not prejudice your right to take legal proceedings. A statement describing our complaints handling procedure is available on request. 22. Compensation: If we cannot meet our financial obligations to you, you may be entitled to compensation under the Financial Services Compensation Scheme established under the Financial Services and Markets Act Details of your rights under this scheme are available from us on request, and further information is available from the Financial 18 Protected FTSE Bonus Plus Plan

21 Services Authority and the Financial Services Compensation Scheme. A statement describing your rights to compensation is available on request. The amount and scope of the compensation scheme, being 100% of the first 30,000 invested and 90% of the next 20,000 invested, making a maximum compensation amount of 48, Commission: If you subscribe to a Plan through an Independent Financial Adviser we will usually pay commission, which will be detailed in correspondence with you. You should inform us of any change in your Adviser to enable us to keep our records up to date. 24. Data protection: The information you provide on your Application Form (or subsequently) will be held and processed by us as data controller for the purposes of the Data Protection Act We may hold and process information for the administration of the service(s) for which you are currently applying or may apply for in future, for the operation of your investment in shares (including e.g. for registration and distribution purposes), for the purposes of statistical analysis, and the marketing of goods or services by this company or other companies in the Keydata group. We may transfer information to other companies in the Keydata group and to third party agents of such companies or of this company for any of the above purposes. Where an Independent Financial Adviser acts on your behalf, we will disclose information concerning your investment to that Independent Financial Adviser. Save as noted previously, we will not provide to any other third party any information relating to you, unless you have given your written consent or unless we are required to do so by law. You are entitled to request details of information we may hold about you upon payment of a fee and to require us to correct any inaccuracies in your personal data. 25. Money laundering: All transactions relating to products provided by Keydata Investment Services Limited are covered by The Money Laundering Requirements (Criminal Justice Act 1999, The Money Laundering Regulations 2007, FSA Rules and any relevant guidance notes). This means that we are responsible for compliance with these Regulations. As a consequence, you may be required to provide proof of identity when buying or selling your investment. 26. Telephone recordings: For your security telephone conversations may be recorded. 27. Telephone and/or internet dealing: We reserve the right to introduce a facility for telephone and/or Internet dealing in respect of your Plan. In the event that we introduce these facilities, we will reserve the right not to accept any dealing instruction unless we are satisfied that all information, which we require at the time of dealing, has been accurately provided. 28. Unclaimed maturity proceeds: The Plan Manager shall continue to treat unclaimed maturity or allocated funds as client money, in accordance with the FSA Handbook, for a period of six years. Interest will not be paid on such funds. The Investor consents to any money held in a client account for more than six years being released and no longer treated as client money in accordance with the client money regulations of the FSA Handbook. 29. Exclusion of liability: We give no warranty as to the performance or profitability of the Plan. You must be aware that the price of Securities can go down as well as up and that there is a degree of risk attached to commodity investments. You may not get back the amount invested. You are reminded that past performance is no guarantee of future returns. In Protected FTSE Bonus Plus Plan 19

22 the event of any failure, interruption or delay in the performance of its obligations resulting from any event or circumstance not reasonably within its control, the Plan Manager shall not be liable or have any responsibility of any kind for any loss or damage you incur or suffer as a result. 30. Insurance: The Plan Manager will maintain insurance cover to indemnify you against, inter alia, misappropriation of funds or Securities by any employee of the Plan Manager. 31. Amendment: Should there be any change in Government legislation, we reserve the right to amend the Terms and Conditions of the Plan by giving up to three months written notice. 32. Governing law: These terms are governed by English law and will become effective on acceptance by the Plan Manager of your signed Application Form. All business is conducted in English. 33. Your statutory rights: Nothing in these Terms and conditions will reduce your statutory rights relating to misdescribed products or services and the fairness of terms on which they are offered. For further information about your statutory rights contact your local authority Trading Standards Department or Citizens Advice Bureau. 20 Protected FTSE Bonus Plus Plan