Key Features of the Stockmarket Linked Savings Account and Stockmarket Linked Savings Account ISA

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1 Key Features of the Stockmarket Linked Savings Account and Stockmarket Linked Savings Account ISA This is an important document. You need to read this before you open a Stockmarket Linked Savings Account or Stockmarket Linked Savings Account ISA.

2 2 Contents Section Page Key Features of this product 3 Questions and answers 5 Important information 11

3 3 Key Features of the Stockmarket Linked Savings Account What is the purpose of this document? To provide you with important information about how the Stockmarket Linked Savings Account works. The Financial Services Authority is the independent financial services regulator. It requires us, HSBC Trust Company (UK) Limited, to give you this important information to help you to decide whether our Stockmarket Linked Savings Account is right for you. You should read this document, along with the Rate Insert and Terms and Conditions carefully so that you understand what you are buying, and then keep it safe for future reference. Throughout this document where we refer to the Stockmarket Linked Savings Account ( the Account ), this includes the Stockmarket Linked Savings Account ISA unless otherwise stated. How to contact us Write to us at: HSBC Trust Company (UK) Limited Frobisher House Nelson Gate Commercial Road Southampton SO15 9DF Call us for general enquires on: (textphone ). Lines are open from 8am to 6pm Monday to Friday (excluding public holidays). To help us continually improve our service and in the interests of security we may monitor and/or record your communications with us. In this document you will see this symbol when you can write to us, or when you can telephone us. Please refer back to these contact details. Its aims To hold your money in a Fixed Term Deposit that provides interest as described in the Rate Insert. To pay back in full your Deposit at the end of the Fixed Term as long as no withdrawals have been made. To offer you the option to hold the Stockmarket Linked Savings Account in a tax-efficient manner in an Individual Savings Account (ISA). Your commitment You should keep the Account for the full Fixed Term. Withdrawing early may mean that you get back less than your original Payment. Minimum Payment of 3,000 to open an Account.

4 4 Risks The index which the Stockmarket Linked Savings Account is linked to may not grow over the Fixed Term, in which case you will only get back your original Deposit, the value of which will be reduced by inflation. Past performance of the Index or indices is not a guide to future performance. The favourable tax treatment of ISAs may change. You may lose some or all of your Payment. In order to meet the aims of the Stockmarket Linked Savings Account, we will deposit your money with HSBC Bank Plc*. They are legally obliged to pay this back along with the stated return at the end of the Fixed Term. While we believe HSBC Bank plc to be financially sound, it is possible that it could become insolvent or be unable to pay back your Deposit. If this happens, your Deposit and the stated return will be at risk and you may not get back all of your original Payment. If this happens then you may be able to make a claim from the Financial Services Compensation Scheme (FSCS). However the FSCS will only pay a maximum of 50,000 to each depositor per firm. This means that if your deposits with HSBC Bank plc and first direct combined amount to more than 50,000 you will still only be able to claim 50,000 from the FSCS. Any additional risks relating to a specific issue are detailed in the Rate Insert. *Credit ratings can be a useful way to compare credit risk associated with different providers and related investments and deposits. Credit ratings are assigned by independent companies known as ratings agencies and reviewed regularly. HSBC Bank Plc is rated AA by Standard & Poor s Ltd. Companies are rated from AAA (most secure/best) to D (most risky/worst) by this independent agency. Based on this rating, HSBC Trust Co Ltd believes that HSBC Bank plc is likely to be able to repay its debts at the end of the Fixed Term, but this is not guaranteed.

5 5 Questions and answers What is the purpose of the Stockmarket Linked Savings Account? To enable you to participate in the Fixed Term Deposit. The Account can be held in a tax-efficient manner in an ISA. The Stockmarket Linked Savings Account ISA is a cash ISA. It only accepts transfers and not current tax year subscriptions. Held outside of an ISA, the Account does not benefit from the same tax advantages as an ISA. What is the Fixed Term Deposit? This is a deposit made on your behalf with HSBC Bank plc. At the end of the Fixed Term, it is designed to pay interest linked to the performance of a stockmarket index or indices. For simplicity, throughout the remainder of this document we will refer to index or indices as just Index. Who can invest in the Stockmarket Linked Savings Account? Individual or joint applicants aged between 18 years and 85 years. Corporate investors, including Partnerships, Trustees, Charities, Clubs, Associations, Self Invested Personal Pensions (SIPPs) and Small Self Administered Schemes (SSASs). Individuals aged between 18 and 85 years who wish to transfer in their previous tax year cash ISA subscriptions. This Key Features Document does not constitute advice on the suitability of the Stockmarket Linked Savings Account. If you are in doubt as to the suitability of this product for your needs, please seek financial advice before proceeding. Is the Stockmarket Linked Savings Account ISA available for non-uk residents? Yes, but only in the following circumstances: you are performing duties as a UK Crown employee working overseas or you are married to, or in civil partnership with a person who performs such duties; depending on your country of residence you may be able to transfer your existing ISA to us from another ISA manager. What is an ISA? An ISA is a tax efficient way of saving or investing as all income and capital gains arising within an ISA are exempt from any personal liability to UK income tax and capital gains tax. There are two types of ISA: (i) Stocks and shares (ii) Cash A payment by you into an ISA in any tax year is called a subscription. You can only subscribe to one of each type of ISA per tax year. ISAs may be transferred to another ISA with the same or a different ISA provider. When an ISA is transferred in this way, the amount transferred is not a subscription and therefore does not count towards the

6 6 subscription limits for the current tax year. It is not possible to transfer a stocks and shares ISA to a cash ISA. How do I apply? Please complete a Stockmarket Linked Savings Account application and/or, in the case of an ISA a Stockmarket Linked Savings Account ISA transfer application form. If you have received advice, the adviser will send your completed application to us. If you are applying without advice please send your completed application to us. By law you may be required to provide appropriate identification and address verification before your Account is opened. To receive the rates currently available, we must receive your application by the dates stated in the current Rate Insert. If you are applying to transfer a cash ISA into a Stockmarket Linked Savings Account ISA please also note : We must receive the transfer in cash before the closing date of the relevant offer. During the period when the cash is being transferred no interest will be paid on the deposit. Your existing ISA manager may charge you for the transfer. How will the charges and expenses affect my Deposit? All the upfront charges within the Stockmarket Linked Savings Account have been built into the rates stated in the Rate Insert applicable to your Account. However, we do reserve the right to charge you for a duplicate of information that we have already supplied to you, such as a duplicate statement. Please see the Terms and Conditions for further details. Is there a cost for advice? Commission may be paid to HSBC Financial Planning Managers. If commission is paid, it will be paid out of the charges on the product, which are built into the rates quoted. No additional charge will be made to pay the commission. Your HSBC Financial Planning Manager will tell you the details of the cost of advice. This usually depends upon the size of your Payment. Can I change my mind? Yes. Once we receive your application we will send you an acknowledgement letter, which includes your reminder of your right to cancel. You have the right to cancel your contract with us within 14 calendar days after you receive this letter. If you would like to cancel, please send your cancellation instructions to us.

7 7 If you exercise your right to cancel within the 14-day cancellation period you will get back your original Payment plus any interest accrued. In the case of an ISA transfer, if you exercise your right to cancel we will hold your Payment in your Account, pending your further instructions, for example, to transfer to another ISA. If your further instructions are not received within 30 business days, your initial Payment, together with any interest accrued, will be returned to you. If your Payment is returned to you, you will lose the tax benefits of holding the money in an ISA. If you do not cancel, the risks and charges detailed in this document will apply and you will be subject to the Terms and Conditions of the Stockmarket Linked Savings Account. If you later withdraw your Payment, you may get back less than your original Payment amount. What will I receive from you? We will write to you once we have accepted your application to confirm your Payment. Shortly after the Strike Date you will receive a letter confirming the Starting Level of the Index. We will send you a half-yearly statement within five weeks of 5 April and 5 October each year. How can I find out the current value of my Account? You can call us for a current valuation. Any valuations that you receive throughout the Fixed Term via a statement, verbally or the internet will include any applicable Market Value Adjustment and represent the value of your Account had you withdrawn on that date. Please see Why is there a Market Value Adjustment? for further details. Can I access my money before the end of the Fixed Term? Yes, but you may get back significantly less than you paid in. Please also note that partial withdrawals from the Account prior to the Strike Date are not allowed. To make a withdrawal you should send your instructions to us confirming the amount you would like to withdraw. There is a minimum withdrawal amount of 250. The balance in your Account must remain above 3,000. How will a withdrawal affect my Account? You may get back less than your original Payment if you make a withdrawal as a Market Value Adjustment will be applied. If you request a full withdrawal, the amount you will receive will be the value of your Account with a Market Value Adjustment applied, which could be negative.

8 8 For a partial withdrawal we calculate the value of your Account including any Market Value Adjustment which may be negative and withdraw the amount requested from this value. Making a withdrawal will mean that at the end of the Fixed Term, any interest payment linked to the performance of the Index will be reduced. If the Market Value Adjustment applied is positive, and a partial or full withdrawal is made, some of the amount withdrawn will be interest and treated as such for tax purposes. We cannot calculate in advance exactly how your Deposit will be affected should you decide to make a withdrawal. Please call us to see what the effects of a withdrawal will be before you decide to withdraw so that you make an informed decision. Why is there a Market Value Adjustment To provide the benefits of your Account, HSBC Bank plc (the Deposit Taker) enters into underlying financial arrangements which lock in your Deposit for the Fixed Term. In order to pay you any early withdrawal the Deposit Taker will need to unwind these arrangements earlier than anticipated. The Deposit Taker will receive the current market value for the unwound financial arrangements and therefore the amount you receive may be lower than your original Payment. We call this the Market Value Adjustment. The current market value is outside the Bank s control but factors that affect it are: i) fluctuations in the level of the Index to date since the Starting Level ii) the prevailing interest rates; and iii) market volatility. If the Market Value Adjustment is positive, it will increase the value of your Account and will be treated as interest for tax purposes. If the Market Value Adjustment is negative it will reduce the value of your Account. Can I transfer my Stockmarket Linked Savings Account ISA to another ISA manager? Yes, you can transfer your ISA to another ISA manager at any time. Please note, however that partial transfers from the Account prior to Strike Date are not allowed. You need to contact your new ISA manager for their transfer form. The new ISA manager must agree to the transfer and contact us before we can carry out your instruction. We will transfer the proceeds to your new ISA manager. In the case of a full transfer, your Account will then be closed. Full or partial transfers prior to maturity will be treated in a similar way to an early withdrawal. Details of how this may affect your Account are given in the How will a withdrawal affect my Account? section above. Please also see the Terms and Conditions for further details.

9 9 What happens to my Account if I die before the end of the Fixed Term? In the case of a sole investor, if you die before the Stockmarket Linked Savings Account matures, your Account may be closed and the current market value (a Market Value Adjustment will apply) will be paid to your personal representatives. Alternatively, your Account can be transferred into a taxed account (an Account held outside of an ISA) in the name(s) of your representatives or, if the personal representative has requested, be transferred into the name(s) of beneficiaries. For an ISA, tax relief given on any interest on your Account after you die will be repaid to HM Revenue & Customs. In the case of a joint Account, if one of the investors dies, the Account will be transferred into the survivor s sole name to continue, subject to the Terms and Conditions. Will I have to pay tax? ISA All returns on Stockmarket Linked Savings Account ISAs are free from both UK Income Tax and Capital Gains Tax. Outside an ISA Personal applicants All interest paid from this Account will usually be subject to deduction of basic rate income tax. This is in line with the HM Revenue & Customs Tax Deduction Scheme for Interest (TDSI) requirements. Higher rate taxpayers will need to pay any further income tax liability through their tax return in the normal way. Interest may be paid gross outside of an ISA but only if all parties to the account are eligible to register and have completed and returned to HSBC Trust Company (UK) Ltd a valid Form R85 (for use by UK resident non taxpaying individuals). References to the tax treatment of the Account detailed above are in respect of Accounts held by UK tax residents or through an ISA. Non personal applicants For non personal applicants, interest will normally be paid gross provided you qualify for gross interest and we have been able to verify your status. You should seek independent advice from a tax adviser if you are unsure of the tax treatment of the product for your purposes. Any statements concerning tax are intended to be general guidance only and do not constitute tax or legal advice. The comments are based on our understanding and interpretation of current UK tax law and HM Revenue and Customs practice at the time of printing. Tax law and practice can change and any change could be applied retrospectively. You should remember that the tax law applicable depends on your own situation and residency status.

10 10 What will I receive at maturity? Your original Deposit (less any withdrawals and Market Value Adjustment where applicable); Any interest due based on the movement of the Index and Any cash and accrued interest that remained in the Client Money Account throughout the Fixed Term. The Account Manager and the Deposit Taker The Account Manager is HSBC Trust Company (UK) Limited whose main business is the provision of trustee and investment services. HSBC Trust Company (UK) Limited is established at 8 Canada Square, London E14 5HQ which is its Registered Office. HSBC Trust Company (UK) Limited is authorised and regulated by the Financial Services Authority (FSA). HSBC Trust Company (UK) Limited is entered on the FSA register with the registration number: HSBC Bank plc is the Deposit Taker for the HSBC Stockmarket Linked Savings Account and Stockmarket Linked Savings Account ISA. HSBC Bank plc is established at 8 Canada Square, London E14 5HQ which is its Registered Office. HSBC Bank plc is authorised and regulated by the FSA and is entered on the FSA register with the registration number: You can check the FSA registration numbers on the Financial Services Authority Register

11 11 Important information How to complain If you are unhappy in any way with our products or services, then please let us know. On receipt of your complaint, we will send you a copy of our leaflet Listening to your comments which explains how we will handle your complaint. A written copy of our complaints procedure is available on request. If we cannot resolve your complaint in the first instance, you can refer it to the Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London E14 9SR. Telephone: complaint.info@financial-ombudsman.org.uk. The Financial Ombudsman Service will generally review complaints from retail customers. However, their criteria for reviewing complaints may mean that even if you have been categorised by a provider of products and services as a retail customer they may not regard you as an eligible complainant. Complaining to the Ombudsman won t affect your legal rights. Compensation HSBC Bank plc is covered by the Financial Services Compensation Scheme (FSCS). The FSCS can pay compensation to depositors if a bank is unable to meet its financial obligations. Most depositors including most individuals and small businesses are covered by the scheme. In respect of deposits, an eligible depositor is entitled to claim up to 50,000. For joint accounts each account holder is treated as having a claim in respect of their share, so for a joint account held by two eligible depositors, the maximum amount that could be claimed would be 50,000 each making a total of 100,000. The 50,000 limit relates to the combined amount in all the eligible depositor s accounts with the bank, including their share of any joint account, and not to each separate account. HSBC and first direct are both trading names of HSBC Bank plc and customers who hold deposits under both trading names will only be eligible for one claim of 50,000 in total. For further information about the scheme (including the amounts covered and eligibility to claim) please ask at your local branch, refer to the FSCS website or call or Law This contract and any proceedings, as well as our dealings with you, are governed by the law of England and Wales. All communication regarding this Account will be in the English language.

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