The Sale for Regular Payment Service

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1 SELF-DIRECTED Explicit Pricing Model The Sale for Regular Payment Service How Cofunds helps you make regular payments by selling from your investments Before setting up a Sale for Regular Payment you must talk to your intermediary and ensure you understand the processes set out in Section 1. A Sale for Regular Payment will have consequences on your investment. SECTION 1 explains what a Sale for Regular Payment is, how it works and answers some of the most commonly asked questions. SECTION 2 is your application form to your intermediary to set up a Sale for Regular Payment. You should complete and sign Section 2 to provide your confirmation, while your intermediary should keep Section 2 as a record of your instruction. You should keep Section 1 for your reference. Throughout this document, unless otherwise stated, where you see a reference to we or us or our this refers to Cofunds Limited (Cofunds). Issued and approved by Cofunds Limited, One Coleman Street, London, EC2R 5AA. Registered in England and Wales No Authorised and regulated by the Financial Conduct Authority (FCA). FCA Registration No

2 Section 1: Your questions answered on the Sale for Regular Payment service Q1. What is a Sale for Regular Payment? A. A service to help manage payments you have arranged to go out of your Cofunds Cash Account for ISAs and investment funds. Where you have instructed us to make payments from your Cash Account but don t have enough money in that account to meet the payments due to be paid that month, you can set up a Sale for Regular Payment to instruct Cofunds to sell a portion of your ISA or investment funds to raise the required amounts. Q2. What is the main benefit and consideration? A. Benefit setting up a Sale for Regular Payment removes the worry of checking every month that your Cash Account has enough money in it to supply your regular withdrawal or pay your fees and charges. Consideration in a situation where your funds are regularly sold to meet payments, your investment capital could be reduced or entirely depleted and you may lose tax benefits or incur tax liabilities. We provide more details about tax later on. Talk to your intermediary about whether this service is appropriate for you. Q3. What payments can I make using a Sale for Regular Payment? A. Platform Charge Regular withdrawals Intermediary Fees & Charges Q4. How does a Sale for Regular Payment work? A. Cofunds will calculate whether you have enough money in your Cash Account to cover any related payments due to go out that month. This calculation takes place on the 5th working day of the month. If the calculation shows that you will not have enough money in your Cash Account to meet the required payments, on the 9th working day of the month we ll sell enough units or shares from your investments to raise the required amount. We ll write to notify you of any changes that are made to your account. Please note that our calculation only includes funds that are priced daily any funds you hold that are priced weekly will not be considered, even if they are large enough to raise the required amount. We ll sell 10% over the required amount to cover any further shortfall that may result from market movements between the date of the calculation and the date of the sale. Any amount left over following the sale will remain in the Cash Account to be included in the next calculation. There are two ways in which we sell units or shares from your investment: Option (a) or Option (b) from your largest value fund holding; from a fund nominated by you. You can at any stage switch between the options (a) and (b) above please talk to your intermediary. If you would like to terminate the Sale for Regular Payment you will need to talk to your intermediary. Q5. How do I know which of the two methods will apply to my investments? A. Together with your intermediary, you decide whether you would prefer us to sell from either option (a) or option (b) in question 4. You decide whether you want your Sale for Regular Payment to apply to your ISA or your investment funds, or both. You confirm your choices to your intermediary by ticking the relevant boxes in Section 2. Q6. What happens if I have more than one investment product? A. If you choose to sell from your largest fund option (a) we ll sell units or shares from the largest fund held across your selected products. The largest fund is the one which has the highest accumulated value across your selected products we add together holdings in the same fund across different products, so a fund that is held repeatedly in a number of products can be the largest even if it is not the largest within any single individual product. If your largest fund is held in more than one of your selected products, we ll sell the fund proportionately between them see Figure 1 below for an illustration. Figure 1: Example of how a largest fund is sold between two products. Investment s 50% of total investment on Cofunds Blue 30% Red 30% Green 40% ISA 50% of total investment on Cofunds Yellow 25% Blue 25% Purple 50% Blue = (30% of 50%) + (25% of 50%) = largest fund. The whole of the required amount is raised from the Blue fund, but split across the two products so half from Blue in Investment s and half from Blue within the ISA. 2 The Sale for Regular Payment Service

3 If you choose option (b) and your nominated fund is held in more than one of your selected products, then we ll sell from it proportionately across the selected products. We ll sell proportionately between your ISA and investment funds products for example if 50% of your investment is in investment funds and 50% is in an ISA, if your largest or nominated fund is held in both products we ll raise 50% of the required amount by selling from the investment funds and 50% by selling from the ISA - see Figure 1. The minimum we ll sell from a single fund is 1 of units. This means that if, for example, a proportionate sale between your funds would need to deduct less than 1 from each fund to meet your required payment, we ll nonetheless sell 1 from each fund and thus sell more than is necessary to meet your required payment. The extra proceeds from the sale will be credited to your Cash Account. Q7. What if Sale for Regular Payment can t raise enough to meet the payments I ve arranged to go out of my account? A. We ll attempt to sell funds to raise the amount required to meet all the scheduled payments, but if enough money can t be raised then some or all of your payments may not be met. The priorities of payments are as follows: 1. Platform Charge (payments to Cofunds) 2. Regular withdrawals (payments to you) 3. Intermediary Fees & Charges (payments you agreed with your intermediary) If you have chosen option (b) from a fund nominated by you and we can t raise enough from your nominated fund (or the fund is not available for trading at that time) we ll therefore go to the largest fund owned by you. If it is possible, we ll revert you to option (a), so that the Sale for Regular Payment instruction will sell from your largest fund from now on. We ll write to tell you if we do this, and notify your intermediary. If, at the time of the calculation, enough money can t be raised to meet any of the payments you ve arranged to go out of your Cash Account we ll stop your Sale for Regular Payment instruction for the current month, and will permanently end any regular withdrawal and drawdown mandates you have in place. Any product charges or intermediary charges will accrue - we ll attempt to sell assets to pay for these the following month. We ll write to notify you of any changes that are made to your account. Please note that our calculation only includes funds that are priced daily any funds you hold that are priced weekly will not be considered, even if they are large enough to raise the required amount. Q8. What if market movements mean that my Sale for Regular Payment can t raise enough to meet the payments I ve arranged to go out of my account? A. At the time of calculation, if it shows we can raise enough to meet your scheduled payments, we ll carry out the sale on the 9th working day of the month. However, as the sale is four working days after the calculation, market movements may mean that the sale doesn t raise the predicted amount. If this means that there s insufficient money within your Cash Account when the payments are due, we ll use the money that has been raised to pay the scheduled payments in the priority order set out in question 7. Should there not be enough to pay all the payments in full, we ll pay as much of the lower priority payments as possible (although we ll always leave the intermediary fees and charges to accrue). We ll not be responsible for any shortfall, and it will be your responsibility to arrange to make up any difference. We ll write to notify you of any changes that are made to your account. Q9. What if I trade between the calculation and sale dates? A. In a situation where you choose to place a sale or switch transaction between the calculation date on the 5th working day of the month and the sale date on the 9th working day of the month, this can result in the units needed for the Sale for Regular Payment becoming unavailable. In these instances we ll not be able to carry out the Sale for Regular Payment using the usual automatic process, which may mean that the sale is delayed to the 10th business day of the month. Q10. Are there any tax implications arising out of a Sale for Regular Payment? A. Within a Cofunds ISA there s no capital gains tax for the sale of units. However, once you ve withdrawn money from your ISA you ll lose the future tax benefits on the amount withdrawn. For investment funds, you may incur a capital gains tax liability on the gain made through the sale of units. See the Investment s Key Features ( and speak to your intermediary for more information. The Sale for Regular Payment Service 3

4 Glossary Capital Gains Tax if you sell your investment any growth may be subject to capital gains tax, if you exceed your annual capital gains tax allowance. Please speak to your intermediary for more information. Cofunds Cash Account for ISA and investment funds an account that allows you to hold your money that is destined for investment funds and ISAs on Cofunds. Date of calculation on the 5th business day of the month we review your Cash Account to ensure that you have enough funds in your Cash Account to pay any withdrawals, charges etc that are due to go out that month. Date of Sale occurs on the 9th business day of the month if after the Date of Calculation we see that you do not have sufficient funds in your account, we start the Sale for Regular Payment. (s) general term for a form of investment. It works by gathering money from investors and invests it according to a clear set of investment objectives. Product This means an investment product on Cofunds. We treat investment funds held outside a wrapper as a product, along with ISAs, pensions and investment bonds. Sell is when you cash in your investment. Shortfall the amount by which a financial obligation or liability exceeds the amount of cash that is available. Switch is to take your investment out of one fund and re-invest into another. Unit(s) a fund is made up of units, so the person(s) that are invested into a fund(s) all own units of that fund(s). We/us/our Where you see a reference to we or us or our throughout this document, unless otherwise stated, this refers to Cofunds Limited (Cofunds). Holdings the contents of an investment portfolio. A range of investment products, from stocks, bonds and mutual funds to options, futures and exchange-traded funds. Intermediary Fees & Charges these are the fees and charges you have agreed to pay your intermediary in return for the services they provide you. Different types that could apply to you include: Subscription Charges Service Charges One-off fees Ongoing fees. What you ll actually pay depends on what you ve agreed with your intermediary. 4 The Sale for Regular Payment Service

5 Section 2: Instruction to your intermediary to set up a Sale for Regular Payment mandate This form is intended to help you to give your intermediary the authority to set up a Sale for Regular Payment for you. You do not need to send a copy of this form to Cofunds, but your intermediary should keep a copy as a record of your instruction. Please tick the boxes as appropriate. 1 Client Declaration I confirm that my intermediary has explained the Sale for Regular Payment processes detailed in Section 1 and the possible consequences of these processes on my investment. I confirm that my intermediary has explained that the Sale for Regular Payment process may result in the reduction of my capital, and/or in capital gains tax liabilities. I agree for my intermediary to set up a standing instruction for a Sale for Regular Payment in accordance with my instructions below. 2 Client Instruction to Intermediary ACCOUNT LEVEL INSTRUCTION: I choose for the Sale for Regular Payment to be made from my (a) Largest fund OR (b) Nominated fund My nominated fund is: I choose for the Sale for Regular Payment mandate to apply to: My ISA AND/OR My Investment s Name Please include the names of all joint holders: SIGNED Please include the signatures of all joint holders: Date INTERMEDIARY CONFIRMATION Full name of Regulated Firm FCA Ref No. Name Position Date SIGNED One Coleman Street, London, EC2R 5AA. Registered in England and Wales No Authorised and regulated by the Financial Conduct Authority (FCA). FCA Registration No CF20SDE 02/14 The Sale for Regular Payment Service 5

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8 One Coleman Street, London, EC2R 5AA. Registered in England and Wales No Authorised and regulated by the Financial Conduct Authority (FCA). FCA Registration No CF20SDE 02/14