This Plan will put your invested capital at risk. UK Fixed Income Plan (February 2013)

Transcription

1 This Plan will put your invested capital at risk UK Fixed Income Plan (February 2013)

2 Contents Key dates 2 Important terms 3 Introducing the UK Fixed Income Plan 5 (February 2013) Is the Plan right for me? 6 How does the Plan work? 7 The Quarterly Fixed Income 8 Payments explained The maturity payment explained 9 About the FTSE 100 Index 11 What are the risks? 12 Questions 13 Contacts 19 Terms and Conditions 21 Key dates Plan available for sale 1 February 2013 to 28 March 2013 ISA transfer application deadline 14 March 2013 ISA application deadline 28 March 2013 Direct Account application deadline SIPP/SSAS application deadline 28 March March 2013 Initial Valuation Date 4 April 2013 Start Date 18 April 2013 Quarterly Fixed Income Payment Dates Quarterly on 4 July, 4 October, 4 January and 4 April, or the next Business Day when this is not a Business Day, commencing on 4 July Final Valuation Date 4 April 2019 Maturity Date 11 April

3 Important terms Here is a short description of some of the important terms used in this Plan brochure. See the Terms and Conditions on pages for further information. Adviser Charge The amount you agree to pay to your financial adviser for their services. Application Form The application form to invest in the Plan, either via an ISA or Direct Account, and can include a Transfer Application Form. Business Day Any day (other than Saturday or Sunday) on which banks are open for business in the UK. Client Money Money held in accordance with the provisions of the FSA s Client Assets Sourcebook relating to client money. Direct Account Any part of your investment that is not part of an ISA. Final Index Level The closing level of the Index on the Final Valuation Date. Final Valuation Date The date when we calculate the Final Index Level and the Maturity Value. FSA The Financial Services Authority. FSCS The Financial Services Compensation Scheme. Index The FTSE 100 Index which is made up of 100 of the largest companies by market capitalisation listed on the London Stock Exchange. Initial Index Level The closing level of the Index on the Initial Valuation Date. Initial Valuation Date The date when we calculate the Initial Index Level. Investment Amount The amount invested into the Plan. This will not include any Adviser Charge. ISA An Individual Savings Account. ISA Manager The person who is approved to administer an ISA, and in respect of an ISA related to the Plan, means The Royal Bank of Scotland plc. Life of the Plan When determining whether or not the Index has ever closed at less than 50% of its Initial Index Level, the period from the Initial Valuation Date to, and including, the Final Valuation Date. Maturity Date The date on which your original Investment Amount and any additional return due to you is paid into a Client Money account, pending your further instructions. Maturity Value The final value of the Securities and the Plan, calculated as set out in the Plan brochure and the prospectus of the Securities. Plan The UK Fixed Income Plan (February 2013), comprising the investments subscribed for through your ISA and/or your Direct Account, as specified in your Application Form(s). Plan Manager The company which is responsible for the administration of the Plan, which in this case is The Royal Bank of Scotland plc. Quarterly Fixed Income Payment The amount due to you, which we will calculate on each Quarterly Fixed Income Payment Date throughout the Life of the Plan. Quarterly Fixed Income Payment Dates The dates on which your Quarterly Fixed Income Payments will be transferred to you. Securities The securities, in the form of warrants, notes or certificates, which are available for purchase on your behalf as part of the Plan. Start Date The date on which Securities are purchased on your behalf. Transfer Application Form An application form to transfer your investment in an existing ISA to an ISA under the Plan. Valuation Date The two days per month when you can withdraw money from the Plan, and which will be the 8th and 21st of each month (or the next Business Day when not a Business Day). We, us, our and RBS plc The Royal Bank of Scotland plc. We are a member of The Royal Bank of Scotland Group plc (the RBS Group ). For information about our group of companies, please visit and click on About Us. 3

4 What are Securities? Securities are financial instruments which represent a contractual agreement between parties and which typically hold financial value to the owner of the Security. There are many different types of Securities including debt securities such as bonds and equity securities such as shares. Securities are tradable, often on exchanges such as the London Stock Exchange, so can be bought and sold by investors. The Securities used in this Plan are effectively a type of loan to the bank which issues them, in this case, The Royal Bank of Scotland plc. What is an index? An index is a tool for measuring the performance of a collection of financial assets. An index may, for example, be composed of shares in companies from a specific industry sector or a particular country or it may contain a range of commodities such as oil, gold or wheat. An index is therefore often useful as a benchmark which can be used to represent the performance of a particular market sector. What is the FTSE 100 Index? The FTSE 100 Index is a measure of the share price performance of the largest 100 companies listed in the UK on the London Stock Exchange. The companies are selected based on their market capitalisation. It currently includes household names such as Tesco, Vodafone and Unilever. What is market capitalisation? Market capitalisation is a measure of the size of a company. It is calculated by multiplying the number of shares in a company by the current share price. 4

5 Introducing the UK Fixed Income Plan (February 2013) The UK Fixed Income Plan (February 2013) (the Plan ) is a six year investment which provides a Quarterly Fixed Income Payment. Whether or not you receive back your original Investment Amount at maturity is dependent on the performance of the FTSE 100 Index ( the Index ). This Plan will put your invested capital at risk. The Plan The Plan provides investors with a fixed income payment of 1.25% (gross) each quarter, throughout the six year Life of the Plan. The Quarterly Fixed Income Payments are not dependent on or affected by the performance of the Index. This Plan will put your invested capital at risk, which means you could lose some or all of your original Investment Amount at maturity. The return of your capital at maturity will depend on the performance of the FTSE 100 Index throughout the Life of the Plan. Further details of how the Plan works, including the circumstances in which you may lose some or all of your original Investment Amount, are explained on pages When you invest in the Plan, your money will be used to buy Securities issued by The Royal Bank of Scotland plc ( RBS plc ). This means that the quarterly income payments, and the repayment of your original Investment Amount at maturity, are dependent on the ability of RBS plc to pay what it owes you. Therefore, in the unlikely event that RBS plc were to default or go bankrupt, you could lose some or all of your original Investment Amount and any remaining income payments. For further details see page 18. The Plan is only available via your financial adviser. Before you invest in the Plan you should ensure that you read and understand this brochure, including the Terms and Conditions. You can only invest in this Plan if a financial adviser has confirmed it is suitable for you. Please see pages 3 and 4 for useful explanations of the important terms used in this brochure. These terms are then designated with capital letters throughout the brochure. 5

6 Is the Plan right for me? The points below highlight some of the factors you should consider with your financial adviser when deciding whether to invest in the Plan. The Plan may be right for you if: You have a minimum 5,000 to invest. You have enough money to cover any emergencies and are happy to keep your money invested for six years. You are happy to put your invested capital at risk in the knowledge that you may lose some or all of your original Investment Amount. You are happy for your money to be invested with RBS plc for six years. You are looking for an investment that pays a quarterly fixed income amount. You want the opportunity to make a tax efficient return by investing in a stocks and shares ISA. You would like an investment where the return of your original Investment Amount is linked to the performance of the FTSE 100 Index. The Plan may not be right for you if: You may need access to your money in the next six years. You do not have any funds set aside for an emergency. You do not want to put your invested capital at risk. You are not willing to take the risk that RBS plc may default or go bankrupt during the course of the Plan. You are not looking for an investment that pays a quarterly fixed income amount. You want to add to your investment on a regular basis. You do not want an investment where the return of your original Investment Amount is linked to the performance of the FTSE 100 Index. You are not sure how the Plan works or have not understood this brochure. 6

7 How does the Plan work? The diagram below illustrates the returns you will receive from the Plan and how we determine whether or not you will receive back your original Investment Amount on the Maturity Date: Start of the Plan RBS plc will record the closing level of the FTSE 100 Index on the Initial Valuation Date. This gives the Initial Index Level. Year 1 to 6 Quarterly Fixed Income Payment Dates Quarterly on 4 July, 4 October, 4 January and 4 April throughout the six year Life of the Plan. You will receive 1.25% (gross) of the original Investment Amount within 5 Business Days of the Quarterly Fixed Income Payment Dates. End of year 6 Is the FTSE 100 Index at or above the Initial Index Level on the Final Valuation Date? No Has the closing level of the FTSE 100 Index ever been below 50% of its Initial Index Level during the Life of the Plan? Yes Your original Investment Amount will be reduced by the same percentage as that by which the FTSE 100 Index closes below its Initial Index Level on the Final Valuation Date. You will lose some or all of the original Investment Amount. Yes No You will receive back the original Investment Amount within 5 Business Days of the Maturity Date. You will receive back the original Investment Amount within 5 Business Days of the Maturity Date. 7

8 The Quarterly Fixed Income Payments explained The Quarterly Fixed Income Payments The Plan offers a Quarterly Fixed Income Payment equal to 1.25% (gross) per quarter of the original Investment Amount. Income will be paid quarterly and will be paid within 5 Business Days of the Quarterly Fixed Income Payment Date, throughout the six year Life of the Plan. This income payment is not dependent on, or affected by, the performance of the FTSE 100 Index. Examples of the Quarterly Fixed Income Payments The table below illustrates what you would receive on the Quarterly Fixed Income Payment Dates depending on your original Investment Amount. Original Investment Amount Quarterly Fixed Income Payment Quarterly payments of 1.25% (gross) Total for a year Total over the Life of the Plan 100,000 1,250 5,000 30,000 75, ,750 22,500 50, ,500 15,000 25, ,250 7,500 10, ,000 5, ,500 The returns stated are gross of any tax. It is expected that returns outside of an ISA may be subject to income tax. See Types of investment on page 13. 8

9 The maturity payment explained At the end of six years there are three potential outcomes, depending on how the Index has performed over the Life of the Plan: What is the Initial Index Level? This is the closing level of the FTSE 100 Index on the Initial Valuation Date, 4 April What is the Final Index Level? This is the closing level of the FTSE 100 Index on the Final Valuation Date, 4 April Calculating the return of your original Investment Amount on the Maturity Date Outcome 1 Final Index Level is at or above the Initial Index Level You will receive your original Investment Amount within 5 Business Days of the Maturity Date. Outcome 2 Outcome 3 Final Index Level is below the Initial Index Level but the closing level of the Index has NEVER been less than 50% of its Initial Index Level during the Life of the Plan Final Index Level is below the Initial Index Level and the closing level of the Index HAS been less than 50% of its Initial Index Level during the Life of the Plan You will receive your original Investment Amount within 5 Business Days of the Maturity Date. Your original Investment Amount will be at risk and will be reduced by the same percentage as that by which the Final Index Level of the FTSE 100 Index is below its Initial Index Level. This means that you will lose some or all of the original Investment Amount. 9

10 Examples of the total returns of this Plan The table below illustrates what returns you would receive in a range of different scenarios. The examples are based on an original Investment Amount of 10,000 and are gross of tax. What you actually receive at maturity will be dependent on the actual performance of the FTSE 100 Index. Your original Investment Amount is at risk if the closing level of the FTSE 100 Index is less than 50% of its Initial Index Level on any day during the Life of the Plan and fails to recover to its Initial Index Level by the Final Valuation Date. The closing level of the FTSE 100 Index has never been less than 50% of its Initial Index Level during the Life of the Plan The closing level of the FTSE 100 Index has been less than 50% of its Initial Index Level during the Life of the Plan Change in the level of the FTSE 100 Index from its Initial Index Level to its Final Index Level Total income paid over the Life of the Plan Capital returned at maturity Total income paid over the Life of the Plan Capital returned at maturity +100% 3,000 10,000 3,000 10, % 3,000 10,000 3,000 10, % 3,000 10,000 3,000 10, % 3,000 10,000 3,000 10, % 3,000 10,000 3,000 10,000 0% 3,000 10,000 3,000 10,000-10% 3,000 10,000 3,000 9,000-25% 3,000 10,000 3,000 7,500-50% 3,000 10,000 3,000 5,000-75% n/a n/a 3,000 2, % n/a n/a 3,

11 About the FTSE 100 Index The return of your original Investment Amount is dependent on the performance of the FTSE 100 Index. This Index is made up of the largest 100 companies by market capitalisation listed in the UK on the London Stock Exchange and currently includes household names such as Tesco, Vodafone and Unilever. Market capitalisation is a measure of the size of a company. It is calculated by multiplying the number of shares in a company by the current share price. The share prices of these companies will change, so the level of the FTSE 100 Index will rise and fall. Historical performance of the Index Index level re-based at 100 (as at 14 Jan 2008) Jan Jan Jan Jan Jan Jan 2013 FTSE 100 Index Source: Bloomberg, 14 January Please note: past performance should not be used as an indicator of future performance. Key considerations when investing in products linked to the FTSE 100 Index The Index may be postponed or terminated if the shares that make up the Index are not published, or where, for example, the relevant stock exchange fails to open or suspends or stops trading. Following the occurrence of these market disruption events, or other events that cause the Index to be adjusted, RBS plc has the discretion to make certain decisions, calculations and corrections which may apply to the Plan, though RBS plc must always act in good faith when making any decisions, calculations or corrections. Should the Index cease to exist, any product linked to the Index may be restructured or may terminate early. This may have a negative impact on the return on any investment in such a product. If any of these disruption or termination events occur, RBS plc may, as issuer of the Securities under the Issuer s Prospectus, adjust the calculation of payments or defer payments under those Securities. 11

12 What are the risks? The Plan will put your invested capital at risk. You will lose some or all of your original Investment Amount if the FTSE 100 Index ever closes at less than 50% of its Initial Index Level, during the Life of the Plan, and does not recover to at least its Initial Index Level by the Final Valuation Date. Because you are investing in the Plan, your money will be used to buy Securities issued by RBS plc. This means that, in the unlikely event that RBS plc were to default or go bankrupt, you could lose some or all of your original Investment Amount and any remaining income payments. The Index is linked to a collection of underlying company shares in the UK. Prices of these shares can move up and down very quickly and may be negatively affected by global economic, financial and political developments. You are not investing directly in the underlying company shares to which the Indices provide exposure and therefore you will not receive dividends. If you decide to sell the Plan before maturity, the amount you receive back will be dependent on the market value of the Securities trading on the London Stock Exchange. You could get back significantly less than you originally invested. If the Quarterly Fixed Income Payments are not equal to or above the rate of inflation over the course of the Plan, the real value of your investment will fall, as your money will buy you less than it would have done when you invested it. Tax rules may change during the course of the Plan, which may affect the tax treatment of any return you receive. The Quarterly Fixed Income Payments are not linked to the performance of the Index. Therefore you will not benefit from any rise in the Index levels. 12

13 Questions Qualifying investors Who can invest? You must be aged 18 or over to apply. You must be UK resident for tax purposes. The Plan is not available for US persons. How much can I invest? The minimum original Investment Amount for the Plan is 5,000, which is separate from any Adviser Charge. There is no maximum for Direct Account investments, ISA transfers or SIPP/SSAS investments. The total 2012/2013 ISA allowance is 11,280. Charges What are the Plan charges? All charges applicable to the Plan have already been built into the Plan structure and so have been accounted for in the Quarterly Fixed Income Payments described in this brochure. This means that, if you hold the Plan to maturity, any income payments will be based on the whole of your original Investment Amount. These charges will be no more than 1.5% of your original Investment Amount. What are Adviser Charges? Financial advisers set their own charges for their services and these are known as Adviser Charges. Financial advisers must disclose what they will charge you at the outset, using some form of price list or tariff, confirming the specific amounts you will be charged. You can either pay the Adviser Charge directly to your financial adviser or you can add the Adviser Charge to the amount you give us to invest in the Plan and we will pay it to your financial adviser on your behalf. You will be given details of any Adviser Charge we pay to your financial adviser in our confirmation of your investment. Types of investment Direct Account You can invest directly into the Plan as an individual or a joint account holder and also as a corporate body, a trust or a charity. ISA If you are ordinarily resident in the UK for tax purposes, you can invest up to a maximum of 11,280 into a 2012/2013 stocks and shares ISA. The total annual ISA allowance for the tax year 2012/2013 is 11,280. This includes any amount you may invest in a cash ISA during the same year. This Plan is only available as a stocks and shares ISA. You can transfer all or part of any existing stocks and shares or cash ISA investments above 5,000 into this Plan. If you transfer an ISA investment you have made in this tax year then you must transfer the full amount. Your existing provider may make a charge for transferring your ISA. You may also lose out on growth or interest while your ISA is being transferred. It is important that we receive your ISA transfer funds by the 9 April If we receive your ISA transfer funds after this date we will return the cheque to your original ISA manager. 13

14 SIPP/SSAS You can invest pension monies via a Self Invested Personal Pension (SIPP) or Small Self Administered Scheme (SSAS). RBS plc places no limit on the maximum investment amount. Tax Tax treatment depends on individual circumstances and may be subject to change in the future. These statements are not intended to be, nor should they be, regarded as legal or tax advice and you should consult your tax adviser to obtain advice about the particular tax treatment in relation to this Plan, particularly if you may be subject to tax in other jurisdictions. How will my investment be treated for tax purposes in the UK? All Quarterly Fixed Income Payments will be paid gross. Direct Account It is expected, based on our understanding of current tax regulations, that any Quarterly Fixed Income Payments from the Plan for individuals and joint account holders will be treated as income and may be subject to income tax. ISA Under current legislation, the proceeds of Securities held within an ISA are not subject to either UK income tax or UK capital gains tax, and any gains or losses on your Securities will be disregarded for the purposes of the calculation of UK taxes. Making an investment How do I apply? The Plan is only available via your financial adviser and they will explain how to apply for the Plan. Before you invest in the Plan, it is important that you read and understand this brochure, including the Terms and Conditions. You can only invest in this Plan if your financial adviser has confirmed it is suitable for you. Your financial adviser must satisfy various procedural requirements before we can accept your application. What confirmation of my investment will I receive? Within five Business Days of our receipt of your money, a correctly completed Application Form and provided that your financial adviser has also satisfied certain conditions before we receive your money and Application Form, we will send you a confirmation that your application has been accepted. We will also enclose details of your right to cancel within 14 days of the date you receive our letter confirming acceptance of your application. If your financial adviser has not satisfied these conditions before we receive your money and Application Form, we will notify your financial adviser as soon as practicably possible and return your original Investment Amount without any interest. What happens to my money before the Start Date? As soon as we receive the Adviser Charge from you it will cease to be your money and will be payable to your financial adviser. We will place your original Investment Amount in a Client Money account with Lloyds TSB Bank plc. No interest will be paid. 14

15 What happens to my money on the Start Date? We will arrange that your original Investment Amount will be used to buy Securities issued by RBS plc with a fixed Maturity Date. We shall be the custodian of your Securities but these Securities and the Securities of other investors will be held by a sub-custodian on our behalf. You will however remain the beneficial owner. How is my income paid? On each Quarterly Fixed Income Payment Date, we will calculate the Quarterly Fixed Income Payment that is owed to you. We will make the payment to your nominated bank or building society account within 5 Business Days of this date. The Securities have been structured so that they can give the Quarterly Fixed Income Payments described earlier in this brochure. The Quarterly Fixed Income Payments and the return of your original Investment Amount at maturity depend on the ability of RBS plc to pay what it owes you at maturity. Credit ratings What are credit ratings? Credit ratings can be a useful way to compare the credit risk associated with different product providers and related investments. Ratings are assigned by independent companies known as ratings agencies and they are reviewed regularly and are subject to change if the company s circumstances change significantly and the agency considers it necessary. Fitch s ratings range from AAA (Most Secure/Best) to D (Most Risky/Worst), Moody s ratings of these companies range from Aaa (Most Secure/Best) to C (Most Risky/Worst) and Standard & Poor s ratings range from AAA (Most Secure/Best) to D (Most Risky/ Worst). A rating 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 a rating change, 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 investment advice and should not be seen as a recommendation to purchase, sell, or hold a financial obligation from a particular financial institution. Credit ratings are simply one factor that you can look at when making a decision on whether to make a particular investment. A rating is not a guarantee that a particular institution cannot fail. What are the current RBS plc credit ratings? On 14 January 2013 RBS plc is rated A, with a stable outlook, by Fitch, A3, with a negative outlook, by Moody s and A, with a stable outlook, by Standard & Poor s. For the latest information on the RBS plc credit ratings please visit: The credit rating is not investment advice and should not be seen as a recommendation to purchase, sell, or hold a financial obligation from a particular financial institution, they are simply one factor that you can look at when making a decision on whether to make a particular investment. A rating is not a guarantee that a particular institution cannot fail. 15

16 After making an investment How will you keep me up-to-date with my Plan? We will send a statement twice a year as at 31 March and 30 September (or the next Business Day when not a Business Day) to the address you have given us. Should you wish to find out any other information regarding your Plan, please contact your financial adviser or contact us, see Contacts on page 19. Can I change my mind before the Start Date? You can change your mind within 14 days of the day you receive confirmation that your application has been accepted. To do this you must complete and return the cancellation form which is enclosed with your confirmation. If you do choose to cancel your investment in the Plan, simply fill out the cancellation form and return it to us at the address under Contacts. If you cancel the Plan and we receive your cancellation form before the Start Date we will return your original Investment Amount in the Plan without any interest. If we receive your cancellation form on or after the Start Date we will return the value of the Plan, which may be significantly less than your original Investment Amount, as described more fully in Can I withdraw my money before maturity?. We are unable to return any Adviser Charges you have asked us to forward to your financial adviser. Please speak to your financial adviser if you cancel and would like your Adviser Charge returned. You may be liable to pay any outstanding Adviser Charges. If you cancel an ISA or ISA transfer there is a risk that the ISA status of your investment will be lost. In our cancellation form we will ask you what you would like us to do with the funds. If you do not cancel your money will remain invested in the Plan. Can I withdraw my money before maturity? The Plan is designed to be held for the full six year period until the Maturity Date. However, you may instruct us to sell Securities and withdraw all or part of the proceeds early if you need to. There will be two Valuation Dates each month, on the 8th and 21st, before which you can give us instructions to sell the Securities and withdraw money from the Plan. In order to meet these dates we must receive your request by 12 noon on the Business Day immediately before the Valuation Date. We will then arrange the sale of your Securities. You can withdraw amounts equal to 1,000 or more but, if you do want to keep the Plan open, you must leave at least 1,000 invested in it. If you want to transfer your ISA to another provider, we will not transfer the Securities but rather will proceed as set out above to sell all the Securities then transfer the proceeds (calculated as set out above). Partial transfers are not permitted. Although you will not be charged any fee by RBS plc for selling your investment before the Maturity Date, if you do so, you should be aware that it is likely you will receive less than the value at maturity and you may well receive less than your original Investment Amount. You should be aware before making a withdrawal request that this shortfall could be significant. We will seek to ensure that the sale price that we achieve on any sale (whether of all or part of your investment) will be based on the value of the Plan on the Valuation Date we process your sale request (rather than on the value of the Plan on the day we receive your sale request). RBS plc must always act in good faith when calculating the value of the Plan and will take into account relevant factors including, amongst others: how long there is to the Maturity Date the market conditions prevailing on the relevant Valuation Date, for example, what the current level of the Index is or what current interest rates are the costs that would be incurred if equivalent contracts were entered or terminated on that date. 16

17 What happens if I die before the Plan matures? If you die before the Maturity Date, the Plan will become part of your estate. Your personal representatives will need to contact us in order to let us know how they wish to proceed with the Plan as part of probate/administration. If you made a Direct Account investment, your Plan will remain open until we have received instruction from your personal representatives. If you were invested in an ISA, your ISA will lose its ISA tax status and will be closed automatically. The Plan will be continued as a Direct Account investment until we receive instructions from your personal representatives. Your representatives will have two options: Close the Plan with the proceeds paid to your representatives. The value they receive will be subject to a similar valuation and sale process as set out under the section headed Can I withdraw my money before maturity? so they may receive back less than your original Investment Amount. Keep the Plan open and transfer it to a named beneficiary(ies) to continue the investment until maturity. If your representatives choose this option, the beneficiary(ies) must read and agree to the Terms and Conditions as detailed in this brochure. What happens on the Quarterly Fixed Income Payment Dates? On each Quarterly Fixed Income Payment Date, we will calculate the Quarterly Fixed Income Payment that is owed to you. We will make the payment to your nominated bank or building society account within 5 Business Days of this date. What happens on the Maturity Date? On the Final Valuation Date we will calculate whether you will receive your original Investment Amount or less than your original Investment Amount. Prior to the Maturity Date we will write and inform you of the options that are available to you. After we receive your instructions, we will process them and will meet your request within 5 Business Days of the Maturity Date or receipt of your instructions if later. Until we receive your instructions, we will hold any money that is owed to you in a Client Money account with Lloyds TSB Bank plc. No interest will be paid. If we do not receive your instructions within a reasonable time we may return your funds to you by sending a cheque to the address you have given us. 17

18 Further questions What are the compensation arrangements? The compensation arrangements will differ depending on which of the three time frames detailed in the table below applies. Please be sure to read all sections carefully. Time frame Where is my money? What happens if RBS plc defaults or becomes bankrupt? What happens if Lloyds TSB Bank plc defaults or becomes bankrupt? Before the Start Date Held as Client Money with Lloyds TSB Bank plc Money is returned to you as it is being held by Lloyds TSB Bank plc as protected Client Money segregated from RBS plc assets If you suffer a loss, you may be eligible to claim compensation from the Financial Services Compensation Scheme (the FSCS ) Deposit accounts are covered for up to 85,000 per firm, per customer From the Start Date to the Maturity Date Invested in Securities issued by RBS plc You could lose some or all of your investment. If RBS plc defaults or goes bankrupt, you would not have a claim under the FSCS for this reason alone Not applicable as the money is invested in Securities issued by RBS plc After the Maturity Date Held as Client Money with Lloyds TSB Bank plc Money is returned to you as it is being held by Lloyds TSB Bank plc as protected Client Money segregated from RBS plc assets If you suffer a loss, you may be eligible to claim compensation from the FSCS Deposit accounts are covered for up to 85,000 per firm, per customer There are other exceptional circumstances in which you may be able to claim compensation from the FSCS if RBS plc defaults or becomes bankrupt and had failed to meet its obligations in the management of the Plan. The maximum compensation in this scenario would be 50,000 per firm, per customer. Further information is available from your financial adviser or us. You can find more information about the FSCS (including eligibility to claim) on their website, or by calling How can I get a copy of the issuer s prospectus for the Securities? The prospectus for the Securities in the Plan is available from us for free, please see Contacts on page 19. Do you provide additional support to financial advisers? We may provide financial advisers with support to help improve their service to you. This could include training, seminars and/or marketing materials. For specific details on any support provided, please contact your financial adviser or us. What is my customer category? We will treat you as a Retail Client unless we agree otherwise. This means that you will receive the highest level of regulatory protection. What if I want to complain? If your complaint relates to the advice you received when purchasing the Plan, please contact your financial adviser. If you have a complaint about any aspect of the service we have provided, please contact us at: The Royal Bank of Scotland plc, BNY Mellon House, Ingrave Road, Brentwood, Essex CM15 8TG, or call us on Copies of our complaint handling procedure are available, from the above contact details, on request. If you are unhappy with the way we have handled your complaint you can contact the Financial Ombudsman Service who may take the matter up on your behalf: Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London E14 9SR. 18

19 Contacts The Royal Bank of Scotland plc If you have any queries or if you require a copy of the issuer s prospectus for the Securities, please contact us at: The Royal Bank of Scotland plc BNY Mellon House Ingrave Road Brentwood CM15 8TG Tel: Lines are open between 9am and 5pm Monday to Friday. Calls may be recorded for training and monitoring purposes. Regulator RBS plc is authorised and regulated by The Financial Services Authority. Its address is: The Financial Services Authority 25 The North Colonnade Canary Wharf London E14 5HS We are entered on their register under number You can check this at: or by contacting them on About The Royal Bank of Scotland plc The Royal Bank of Scotland plc is a subsidiary of The Royal Bank of Scotland Group plc. The Royal Bank of Scotland Group plc is one of the world s foremost financial services companies. We work closely with our personal, commercial and large corporate and institutional customers to address their financial needs. Internationally, the RBS Group s brands include The Royal Bank of Scotland and RBS Coutts and NatWest in the UK, Citizens and Charter One in the United States and other well known financial services providers. This item can be provided in Braille or large print, please call us on to request this. For general queries, text phone users can contact us (using the Typetalk service) by prefixing our number with

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21 Terms and Conditions 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. If you open a Plan via a wrapper platform (where permitted by RBS plc) then certain references to you in these Terms and Conditions, will be references to, you or the platform as your nominated agent, where applicable. Definitions Adviser Charge The amount you agree to pay to your financial adviser for their services. Application Form The application form to invest in the Plan, either via an ISA or Direct Account, and can include a Transfer Application Form. Business Day Any day (other than Saturday or Sunday) on which banks are open for business in the UK. Client Money Money held in accordance with the provisions of the FSA s Client Assets Sourcebook relating to client money. Direct Account Any part of your investment that is not part of an ISA. Final Index Level The closing level of the Index on 4 April 2019, subject to adjustment in accordance with the provisions of the Securities as set out on page 11 of this Plan brochure. Final Valuation Date The date when we calculate the Final Index Level and the Maturity Value, which will be 4 April 2019, subject to adjustment in accordance with the provisions of the Securities as set out on page 11 of this Plan brochure. FSA The Financial Services Authority, or any successor organisation. FSA Rules The FSA s Handbook of Rules and Guidance, as amended from time to time. FSCS The Financial Services Compensation Scheme, or any successor organisation. HMRC Her Majesty s Revenue & Customs. Index The FTSE 100 Index which is made up of 100 of the largest companies by market capitalisation listed on the London Stock Exchange. Initial Index Level The closing level of the Index on the Initial Valuation Date. Initial Valuation Date The date when we calculate the Initial Index Level, which will be 4 April 2013, subject to adjustment in accordance with the provisions of the Securities as set out on page 11 of this Plan brochure. Investment Amount The amount invested into the Plan. This will not include any Adviser Charge. ISA Individual Savings Account, which is a scheme of investment managed in accordance with the ISA Regulations by the ISA Manager under terms agreed between the ISA Manager and the investor. ISA Investment Any assets, including the Securities, within the ISA at any time. ISA Manager The person who is approved to administer an ISA, and in respect of an ISA related to the Plan, means The Royal Bank of Scotland plc. ISA Regulations The Individual Savings Account Regulations 1998, as amended or replaced from time to time. Issuer The issuer of Securities, which will be The Royal Bank of Scotland plc. Issuer s Prospectus The prospectus for the Securities. Life of the Plan When determining whether or not the Index has ever closed at less than 50% of its Initial Index Level, the period from the Initial Valuation Date to, and including, the Final Valuation Date. Maturity Date The date on which your original Investment Amount is paid into a Client Money account, pending your further instructions, and which will be 11 April 2019, subject to adjustment in accordance with the provisions of the Securities as set out on page 11 of this Plan brochure. We will make payments to you within 5 Business Days of such date. Maturity Value The final value of the Securities and the Plan, calculated as set out in the Plan brochure and the prospectus of the Securities. Plan The UK Fixed Income Plan (February 2013), comprising the investments subscribed for through your ISA and/or your Direct Account, as specified in your Application Form(s). Plan Manager The company which is responsible for the administration of the Plan, which in this case is The Royal Bank of Scotland plc. Quarterly Fixed Income Payment The amount due to you, which we will calculate on each Quarterly Fixed Income Payment Date throughout the Life of the Plan. Quarterly Fixed Income Payment Dates The dates on which we will calculate the Quarterly Fixed Income Payment due to you, which will be 4 July, 4 October, 4 January and 4 April, throughout the Life of the Plan, or the next Business Day when this is not a Business Day, commencing 4 July We will make the payment to your nominated bank or building society account within 5 Business Days of this date. Securities The securities, in the form of warrants, notes or certificates, which are available for purchase on your behalf as part of the Plan. Start Date The date on which Securities are purchased on your behalf, which will be 18 April Transfer Application Form An application form to transfer your investment in an existing ISA to an ISA under the Plan. Valuation Date The two days per month when you can withdraw money from the Plan, and which will be the 8th and 21st of each month (or the next Business Day when not a Business Day). We, us, our and RBS plc The Royal Bank of Scotland plc. We are a member of The Royal Bank of Scotland Group plc (the RBS Group ). For information about our group of companies, please visit and click on About Us. 21

22 1. Application 1.1 The Royal Bank of Scotland plc is authorised and regulated by the FSA. Under these Terms and Conditions, we act as both Plan Manager (which means that we are responsible for the administration of your Plan) and as ISA Manager (which means that, where you invest via an ISA, we administer your ISA). 1.2 You may open a Plan on the terms of the Plan brochure, the Issuer s Prospectus and these Terms and Conditions. To open a Plan, you should complete the relevant Application Form (either ISA or (non-isa) Direct Account) and send it to the address on the relevant Application Form. 1.3 Upon receipt of a duly completed Application Form and cheque (where required), the Plan Manager may accept your application subject to these Terms and Conditions, and subject to your financial adviser having satisfied various procedural requirements relating to the Plan. Completed Application Forms and payments must be received by the deadlines specified in the Plan brochure. If the application is rejected immediately, we will notify your financial adviser as soon as practicably possible and return your original Investment Amount, without interest, as well as any Adviser Charge. In the event that we have initially indicated acceptance to you, we reserve the right to subsequently reject an application at any time prior to the Initial Valuation Date if the total subscriptions for the Plan do not exceed a minimum level or exceed a maximum level, or your financial adviser fails to continue to meet our requirements or if it would be illegal to continue the Plan. If we subsequently reject your application we will notify your financial adviser as soon as practicably possible and return your original Investment Amount, without interest. In these circumstances, we will not return any Adviser Charge to you and you would need to speak to your financial adviser to request a refund. 1.4 Within five Business Days of accepting your application, we will confirm your application to open a Plan. 1.5 As soon as we receive the Adviser Charge from you it will cease to be your money and will be payable to your financial adviser. 1.6 The Adviser Charge will not be held as Client Money by RBS plc. In the event of our default prior to the payment of such Adviser Charge to your financial adviser, RBS plc will not return the Adviser Charge to you. Your financial adviser has agreed with RBS plc that in these circumstances your financial adviser will not seek any additional sums from you. 1.7 Money representing the original Investment Amount held by RBS plc prior to Securities being purchased on your behalf on the Start Date AND then, between either early termination or final redemption at the Maturity Date and final settlement with you, will be held by RBS plc as Client Money in an account with a third party bank appointed by RBS plc for these purposes. No interest will be payable on such Client Money balances held by the third party bank. The third party bank for the Plan will be Lloyds TSB Bank plc. 2. ISA Accounts 2.1 You must subscribe to your ISA with either your own money or by the transfer of the proceeds of an existing ISA already held by you. Transfers of existing ISAs will normally be arranged by us with the existing ISA Manager(s) following our receipt of a Transfer Application Form from you, at which point we will contact your existing ISA Manager(s) to arrange the transfer for you. Once the proceeds from the existing ISA have been transferred, your ISA will be subject to these Terms and Conditions. 2.2 To effect an ISA transfer, you should complete a Transfer Application Form and send it to the address on the form. A cancellation notice will be sent to you upon our acceptance of your Transfer Application Form. 2.3 You may instruct RBS plc to transfer to another approved ISA Manager the whole of your ISA, subject to and in accordance with the ISA Regulations. Transfers will be processed by RBS plc in accordance with clause 13 as soon as we are reasonably able but in any event within 30 days of receipt of a valid instruction. 2.4 Generally, ISAs can be either cash ISAs or stocks and shares ISAs. Where you are subscribing for a stocks and shares ISA you must not have subscribed, and may not subscribe in the future, to another stocks and shares ISA in the same tax year. Please note that the Securities may be held only in a stocks and shares ISA under the ISA Regulations. 2.5 You will immediately inform us in writing if you cease to be a qualifying individual for the purposes of the ISA Regulations. We will notify you if, by reason of any failure to satisfy the provisions of the ISA Regulations, an ISA has, or will, become void. Where an ISA becomes void for any reason, in the absence of instructions otherwise from you, we will continue to hold the Securities for you, but in a Direct Account and you will lose any favourable tax treatment applicable. 2.6 We shall not accept any further amounts into an ISA if the ISA Regulations no longer give you the right to invest in that ISA. 2.7 Any ISA Investment must not be used as security for a loan. 3. Custody 3.1 RBS plc will act as custodian of your Securities purchased as part of the Plan. RBS plc has appointed The Bank of New York Mellon SA/NV, London Branch (the Sub-custodian ) in the UK to hold and administer your Securities on our behalf. We may change this Sub-custodian from time to time as we consider appropriate. At all times, you will, and indeed must, remain the beneficial owner of the Securities purchased on your behalf as part of the Plan. Where a certificate or other document evidencing title to an ISA Investment is issued, it shall be held by RBS plc or as we may direct. 3.2 Your Securities will be registered in the name of the Subcustodian s nominee (the Nominee ). We have agreed with the Sub-custodian that your Securities will not be lent to any third party and money may not be borrowed on anybody s behalf against the security of your Securities. 22

23 3.3 Although the amount of Securities that you hold will be recorded and separately identified by RBS plc in its records, your holding will not be identifiable by separate documents or certificates of title and will be pooled with all other holders of the Securities. Therefore, in the event of our default where there may be a shortfall in the total pool of Securities held by RBS plc, this shortfall may be shared pro rata among all relevant investors. 4. Taxation 4.1 Under current legislation, the proceeds of Securities held within an ISA are not subject to either UK Income Tax or UK Capital Gains Tax, and any gains or losses on your Securities will be disregarded for the purposes of the calculation of UK taxes. 4.2 Where, however, your Securities are held through the Direct Account (and therefore not subject to the ISA tax shelter) you may be subject, depending on your personal circumstances, to UK tax on any income received or any capital gain arising on disposal. These statements are based on current legislation, regulations and practice, all of which may change. 4.3 Where any deduction or withholding for or on account of tax is required by law (a Tax Deduction ) from any amount otherwise payable, we shall be entitled to make such Tax Deduction and shall not be required to make any increased payment to compensate you for such Tax Deduction. 5. Death In the event of your death, your ISA will lose its ISA status immediately, and any gains or losses after that date will not benefit from the ISA tax shelter. The investment forms part of your estate for Inheritance Tax purposes and, accordingly, we shall act on the instructions of your personal representatives. Your personal representatives can sell your Securities or, subject to these Terms and Conditions, transfer them to your beneficiaries. 6. Maturity Under the terms of the Plan, the final value of the Plan will be calculated on the Final Valuation Date. Prior to the Maturity Date, we will contact you to inform you of your options at maturity and any action required by you. Upon receipt of your valid instructions, we will process them and will meet your request within 5 Business Days of the Maturity Date or receipt of your instructions, if later. Any applicable payment(s) will be made in accordance with clause 13 and subject to any requirements under clause 19. Any sums owing to you, that are not immediately paid, will be held by us as Client Money. Interest will not be paid on such sums. We may return the funds to you if we don t receive your instructions. 7. Conflicts of interest 7.1 RBS plc is a multi-service financial institution, and occasions can arise where we, one of our clients or another member of the RBS Group, may have some form of conflict of interest in relation to the business which is being transacted for you. RBS plc maintains a Conflicts of Interest policy as required by the FSA Rules to manage any such conflict to ensure that customers are not affected by any conflict. In the event that it is not possible to properly manage any conflict, we shall inform you as soon as possible and obtain your instructions. 7.2 For the avoidance of doubt, nothing in this clause will restrict us from providing services to other customers. 8. Compensation 8.1 RBS plc is member of the FSCS, which means that you may be entitled to compensation in the event of our default. Further information is available on request, but in broad terms, your rights are as follows: (a) Money held by us as Client Money will be returned to you and will not be affected by our default. (b) The third party bank that will hold Client Money is also a member of the FSCS; on its default, if you are an eligible claimant under the compensation scheme rules, you may be entitled to compensation of up to 85,000. (c) Where we default in our obligations as Plan Manager under these Terms and Conditions and are insolvent, you may be entitled to compensation of up to 50,000 if you are an eligible claimant under the FSCS rules. 8.2 You should be aware that compensation is not available merely because the Securities perform less well than you expected or because RBS plc becomes insolvent and is unable to pay you back the value of the Securities. 9. Complaints 9.1 If you wish to complain about the Plan or the service we provide to you as the Plan Manager or as the ISA Manager, we have procedures designed to resolve your complaint effectively. Initially you should write to: RBS Administration, BNY Mellon House, Ingrave Road, Brentwood, Essex CM15 8TG. 9.2 You may have a right to complain to the Financial Ombudsman Service if you are not satisfied with our resolution of your complaint. Further details are available on request. 10. Cancellation rights 10.1 RBS plc will give you the right to cancel your Plan within 14 days of the date you receive our letter confirming our acceptance of your Application Form in accordance with the requirements of the FSA Rules. We will deem you to receive our letter confirming our acceptance of your Application Form two business days after such letter is posted to you. You will also be informed of your right to cancel in the information that we send you on receipt of your Application Form. Alternatively you can write to us at RBS Administration, BNY Mellon House, Ingrave Road, Brentwood, Essex CM15 8TG. If you do so, please provide your name, address and reference number with clear instructions to cancel your investment If you exercise your right to cancel (or if your application is rejected) within 14 days and we receive such cancellation notice before the Start Date, we will return your original Investment Amount without any interest. Valid cancellation notices received five calendar days or less before the Start Date will be processed at the next available Valuation Date after the Start Date (see clause 12.7), and you will receive your original Investment Amount, without any interest, after such Valuation Date. 23