RBS UK Balanced Sector Deposit Growth Plan 3

Equity Structured Business Retail area RBS UK Balanced Sector Deposit Growth Plan 3 rbs.com/ukautopilotindex

Contents Key dates 2 Important terms 3 Key features of the RBS UK Balanced Sector Deposit Growth Plan 3 5 Is the Plan right for me? 6 What are the risks? 7 How is the return calculated? 8 RBS UK Balanced Sector Index description 9 Key considerations when placing a deposit linked to the RBS UK Balanced Sector Index 11 Questions 12 Contacts 17 Terms and Conditions 19 Key dates Plan available for sale 9 January 2012 to 2 March 2012 ISA transfer deadline 17 February 2012 ISA deadline 2 March 2012 Direct Account deadline 2 March 2012 SIPP/SSAS deadline 2 March 2012 Initial Valuation Date 4 April 2012 Start Date 13 April 2012 Final Valuation Date 4 October 2017 Maturity Date 11 October 2017 2

Important terms Here is a short description of some of the important terms used in this Plan brochure. See the Terms and Conditions for the full definition of all terms used. Account The deposit account opened by RBS plc for your Deposit. An Account may be either a Direct Account or an ISA Account. 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. Cash ISA An Account established in accordance with the ISA Regulations and consists of a cash component only. Client Money Money held in accordance with the provisions of the FSA s Client Assets Sourcebook relating to client money. Deposit The initial deposit, the initial investment or the amount transferred from another Cash ISA deposited in the Account. Deposit Taker In this case RBS plc is the licensed deposit taker. Direct Account Any part of the Deposit that is not part of an ISA. Final Index Level The average of the closing levels of the Index on the 4th of each month in the last year of the Plan (13 monthly observations in total), or the next Business Day when not a Business Day. Final Valuation Date The date when we calculate the Final Index Level and the Maturity Value. FSA The Financial Services Authority, or any successor organisation. FSCS The Financial Services Compensation Scheme. Index The RBS UK Balanced Sector Index. 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. ISA An Individual Savings Account. ISA Account An Account opened by RBS plc in accordance with the ISA Regulations. 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. Maturity Date The date on which your original investment 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 Deposit (together with any interest), calculated as set out in the Plan brochure. Plan RBS UK Balanced Sector Deposit Growth Plan 3, comprising the deposits placed 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. Start Date The date on which the Deposit is placed with RBS plc. Transfer Application Form An application form to transfer your investment in an existing ISA to an ISA Account 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 the 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 www.rbs.com and click on About Us. 3

What are indices? Indices are tools 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 are equity markets? Equity markets, also known as stock markets, provide companies with a place for investors to buy and sell their shares. Share prices are sometimes sensitive to financial and economic facts, rumour and expectation and, as such, they can be a good indicator of the economic health of a company or market sector. 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

Key features of the RBS UK Balanced Sector Deposit Growth Plan 3 The RBS UK Balanced Sector Deposit Growth Plan 3 (the Plan ) is a five and a half year deposit linked to the RBS UK Balanced Sector Index (the Index ). Your money will be placed on deposit with The Royal Bank of Scotland plc. The Financial Services Authority is the independent financial services regulator. It requires us, The Royal Bank of Scotland plc, to give you this important information to help you to decide whether the RBS UK Balanced Sector Deposit Growth Plan 3 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. The Plan The Plan is designed to repay your original deposit in full at maturity plus a return equal to 1.25 times any rise in the Index after averaging, as explained on page 8. The repayment of your original deposit plus any return will depend upon the ability of The Royal Bank of Scotland plc ( RBS plc ) to pay what it owes you. In the event that RBS plc defaults or goes bankrupt you could lose some or all of your money. If that occurs you may be entitled to compensation from the Financial Services Compensation Scheme ( FSCS ). See page 16 for further information. The RBS UK Balanced Sector Index The RBS UK Balanced Sector Index is one of an exclusive range of indices that are created, owned and maintained by RBS plc and designed to provide access to a variety of investment themes. The RBS UK Balanced Sector Index is designed to represent a balanced measure of the largest companies in the UK equity market. To do this, each of the individual companies and industry sectors within the Index are assigned an equal weighting. Additionally, the RBS UK Balanced Sector Index has an automatic feature, called a Volatility Control Overlay, which is designed to protect against some of the inherent volatility exhibited by shares and cushion the effect of sudden market movements. More detailed information on the Index is provided later in this brochure. The RBS UK Balanced Sector Deposit Growth Plan 3 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. Official Index name The official name of the Index is the RBS UK Balanced Sector Index (GBP) PR 12.65%. 5

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 five and a half years. The Plan may not be right for you if: You may need access to your money in the next five and a half years. You do not have any funds set aside for an emergency. You want to know that your original deposit will be repaid to you at the end of five and a half years (subject to the risk that RBS plc defaults or goes bankrupt and is unable to pay what it owes you). You accept the risk that you may not receive any return on your deposit. You are happy for your money to be deposited with RBS plc for five and a half years. It suits you that any returns on this deposit which are placed outside an ISA may be subject to income tax at your marginal rate. You want the opportunity to make a tax efficient return by investing in a Cash ISA. You would like a deposit linked to the RBS UK Balanced Sector Index. You are looking for a regular income or dividends for your investment. You definitely want to receive a return on your deposit. You are not willing to take the risk that RBS plc may default or go bankrupt during the life of the Plan. You want to add to your deposit on a regular basis. You are not sure how the Plan works or have not understood this brochure. You do not want a deposit linked to the RBS UK Balanced Sector Index. 6

What are the risks? Your money will be placed on deposit with RBS plc and will not be invested directly in the Index. This deposit will be linked to the performance of the RBS UK Balanced Sector Index and will be held by RBS plc from the Start Date until the Maturity Date. RBS plc is legally obliged, if the Plan is held to maturity, to repay your original deposit and any interest that may be due. In the unlikely event that RBS plc were to default or go bankrupt, you could lose some or all of your original deposit and any potential interest. This is known as counterparty risk. If this occurs you may be entitled to compensation from the FSCS. See page 16 for more information. Whether or not you receive any interest on your deposit is dependent on the performance of the RBS UK Balanced Sector Index. Therefore, if the Final Index Level is less than or equal to the Initial Index Level you will only receive back your original deposit (subject to the risk described above). 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. In the circumstances described on page 10, the exposure of the Index to the underlying company shares may change. If this exposure exceeds 100%, this will have the effect of magnifying losses, or, if this exposure falls below 100%, this will have the effect of limiting gains. If you decide to terminate the Plan before maturity, the amount you receive back will be dependent on the early withdrawal value of the deposit. This means that you could get back significantly less than you originally deposited. If the return is not equal to or above the rate of inflation over the life of the Plan, the real value of your deposit will fall, as your money will buy you less than it would have done when you deposited it. Tax rules may change during the life of the Plan, which may affect the tax treatment of any return you receive. 7

How is the return calculated? On the Final Valuation Date we will calculate whether the Index has risen and whether any return is due on your original deposit. To do this we will compare the Final Index Level with the Initial Index Level. If the Final Index Level is greater than the Initial Index Level, you will receive a return at maturity that is equal to 1.25 times the percentage by which the Final Index Level is greater than the Initial Index Level. For example, this means that if the Final Index Level is 10% above the Initial Index Level, you will receive a return at maturity of 12.5% (10% x 1.25). If the Final Index Level is equal to or less than the Initial Index Level, you will not receive a return at maturity. You will receive only your original investment. Initial Index Level This is the closing level of the RBS UK Balanced Sector Index on the Initial Valuation Date. Final Index Level This is calculated as the average of the closing levels of the Index on the 4th of each month over the last year of the Plan (13 monthly observations), or the next Business Day when not a Business Day. Averaging The Final Index Level is calculated as the average of the closing levels of the Index over the final year of the Plan (13 monthly observations). This process is known as averaging. Averaging may benefit the performance of the Plan if the Index falls over the averaging period. However, if the opposite occurs, this will constrain the Plan s performance when compared to a calculation method which does not use averaging. Examples of return Below is a table which illustrates some possible outcomes at maturity. Any return is dependent on the performance of the Index and these figures are given as examples only, in order to illustrate how the Plan works. Original deposit 8 Change in the RBS UK Balanced Sector Index (comparing the Final Index Level against the Initial Index Level) Return received at maturity (gross) Total amount received back (including your original deposit) at maturity (gross) 10,000 +50% +62.5% 16,250 10,000 +10% +12.5% 11,250 10,000 0% 0% 10,000 10,000-10% 0% 10,000 10,000-50% 0% 10,000 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 12.

RBS UK Balanced Sector Index description What does the RBS UK Balanced Sector Index measure? The RBS UK Balanced Sector Index is designed to represent a balanced measure of the largest companies in the UK equity market with the aim of ensuring that the Index is not over-exposed to particular companies and industry sectors. The Index is linked to the performance of up to 90 of the largest companies in the UK equity market (as measured by market capitalisation). The 90 companies are split across 9 industry sectors with each industry sector being made up of up to 10 individual companies. The industry sectors are Basic Materials, Consumer Goods, Consumer Services, Financials, Healthcare, Industrials, Oil & Gas, Technology and Utilities. Rather than weighting the individual companies by their market capitalisation as many traditional benchmark indices such as the FTSE 100 Index do, the RBS UK Balanced Sector Index splits the companies up into their respective industry sectors. Each industry sector, and each company within those industry sectors, is then given an equal weighting within the RBS UK Balanced Sector Index. The weighting of each company and/or each industry sector within the Index will change as the prices of the underlying company shares change. As a result, twice a year, the Index will re-set the weightings to the companies and industry sectors so that they are equally weighted again; this is known as re-weighting. Industry sector breakdown n Industrials 12.56% n Healthcare & Consumer Goods 12.55% n Consumer Services 12.52% n Utilities 12.50% n Basic Materials 12.47% n Technology 12.47% n Financials 12.46% n Oil & Gas 12.46% Source: RBS plc, Global Banking and Markets, 1 December 2011. Note: Healthcare is currently grouped with Consumer Goods until the next re-weighting date only (on 1 June 2012). This is a result of the Healthcare industry sector currently being too small to make up its own industry sector. If you would like more detail on the Index please visit www.rbs.com/ukbalancedsectorindex 9

Volatility Control Overlay On a short term basis, markets can behave unexpectedly and this is particularly true of equity markets which can experience large movements in their price level. Volatility is one measure of these price movements, or of the amount by which the price level of a financial asset moves from its average price level over a set period of time. To limit the impact of this volatility, a Volatility Control Overlay is applied. The Index will have increased exposure to the underlying company shares during periods of low volatility but will proportionally reduce exposure as volatility increases. The exposure to the underlying company shares is adjusted daily and can vary from 0% to 165%. If the underlying company shares rise in a volatile manner then the Volatility Control Overlay may limit the effect of this rise. If you would like more detail on the Index please visit www.rbs.com/ukbalancedsectorindex 10

Simulated and historical performance of the Index Index levels re-based at 100 (as at 1 December 2006) 160 140 120 100 80 60 40 1 Dec 2006 1 Dec 2007 1 Dec 2008 1 Dec 2009 1 Dec 2010 1 Dec 2011 RBS UK Balanced Sector Index FTSE 100 Index Source: Bloomberg, 1 December 2011. Underlying company shares* Please note: past performance should not be used as an indicator of future performance. This information refers to simulated past performance and actual past performance, neither of which should be used as an indicator of future performance. The performance shown in the graph opposite is net of all costs, adjustments and fees. Actual performance of the RBS UK Balanced Sector Index started on 11 May 2009. The Royal Bank of Scotland plc has retrospectively calculated the Index levels based on the Index rules and historical data from sources the Index sponsor deems reliable. *This illustrates how the underlying company shares that make up the RBS UK Balanced Sector Index have performed without the application of the Volatility Control Overlay. The performance of the underlying company shares does not include any dividends. Key considerations when placing a deposit linked to the RBS UK Balanced Sector Index You are not investing directly in the underlying company shares to which the Index provides exposure and therefore you will not receive dividends. The Index operates on the basis of pre-determined rules set by RBS plc. No assurance can be given that the strategy will be successful, generate positive returns or perform better than any benchmark or other indices. RBS plc has discretion in making certain decisions, calculations and corrections which may apply retrospectively or from the relevant date forward, for example, following the occurrence of market disruption events or index adjustment events. The exercise of this discretion may adversely affect the performance of the Index, though RBS plc must always act in good faith when making any decisions, calculations or corrections. Occasions can arise where RBS plc, or any member of the RBS Group, may have some form of conflict of interest in relation to the structure and operation of the Index. RBS plc maintains a Conflicts of Interest policy as required by the Financial Services Authority to manage any such conflict. The Index rules may be amended by RBS plc acting in a commercially reasonable manner. Any such amendment may be made without the consent of, or notice to, investors in products linked to the Index and may have an adverse effect on the level of the Index, though RBS plc must always act in good faith when making any amendments. The Index may be postponed or terminated if the prices of the underlying company shares are not published, or where, for example, the relevant stock exchanges fail to open or suspend or stop trading. The level of the Index may not be published or, in the event that it is not possible or practicable to continue, the Index may be terminated by RBS plc. Should the Index cease to exist, any product linked to this 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 events occur, RBS plc may, as Deposit Taker, adjust the calculation of payments or defer payments on the deposit. 11

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 deposit is 5,000. There is no maximum for Direct Account deposits, ISA transfers or SIPP/SSAS deposits. The total 2011/2012 Cash ISA allowance is 5,340. Charges What are the charges? All charges applicable to the Plan have already been built into the Plan structure and so have been accounted for in the returns described in this brochure. These charges will be no more than 5.25% of your original deposit and they incorporate all costs including management costs, service fees and any commissions payable to your adviser. How much will any advice cost? We will pay a commission, of up to 3% of your original investment, to the adviser who arranged your investment in the Plan on your behalf. You will be given details of the amount paid to your adviser in our confirmation of your deposit. Types of investment Direct Account You can place a deposit direct 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 5,340 via the Plan into a Cash ISA. The total annual ISA allowance with all providers is 10,680 for the tax year 2011/2012. This includes any amount you may invest in a Stocks and Shares ISA during the same year. This Plan is only available as a Cash ISA. Another version of the Plan is available if you wish to invest in a Stocks and Shares ISA. You can transfer all or part of any existing Cash ISA above 5,000 into this Plan. If you transfer a Cash ISA you opened in this tax year then you must transfer the full amount. Your existing provider may make a charge for transferring your ISA. It is important that we receive your ISA transfer funds by the 15 March 2012. If we receive your ISA transfer funds after this date we will return the cheque to your original ISA Manager. 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. 12

Tax How will my investment be treated for tax purposes in the UK? 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. Direct Account It is expected, based on our understanding of current tax regulations, that any returns from the Plan for individuals and joint account holders will be treated as interest and may be subject to income tax. Any returns from the Plan for individuals and joint account holders will be paid net of basic rate income tax as required by law. Higher rate or additional rate taxpayers will have further tax to pay. Any returns from the Plan will be paid gross if you place a deposit as a corporate body or charity and will generally be paid gross if you place a deposit as a trust. ISA Any returns from the Plan will be paid gross. Under current legislation, the proceeds of deposits held within an ISA are not subject to either UK income tax or UK capital gains tax, and any gains or losses on your deposit will be disregarded for the purposes of the calculation of UK taxes. SIPP/SSAS Any returns from the Plan will be paid gross. 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 RBS UK Balanced Sector Deposit Growth Plan 3, 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. What confirmation of my investment will I receive? Within five Business Days of our receipt of your money and a correctly completed Application Form, and subject to your financial adviser having satisfied certain conditions, 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 us accepting your application. What happens to my money before the Start Date? We will place your money in a Client Money account with Lloyds TSB Bank plc. No interest will be paid. If Lloyds TSB Bank plc were to default or go bankrupt before the Start Date and you suffered a loss as a result of this, you may be eligible to claim compensation from the UK Financial Services Compensation Scheme ( FSCS ). See What are the compensation arrangements? on page 16. What happens to my money on the Start Date? Your money will be placed on deposit with RBS plc with a fixed Maturity Date. The deposit has been structured to give the Plan return described earlier in this brochure. The return depends on the ability of RBS plc to pay what it owes you at maturity. 13

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 1 December 2011 RBS plc is rated A, with a stable outlook, by Fitch, A2, 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 rating please visit: www.investors.rbs.com/credit_ratings. After making an investment How will you keep me up-to-date with my Plan? We will send a statement twice a year in April and October to the address you have given us. Information on the performance of the Index is available on our website at: www.rbs.com/ukbalancedsectorindex Should you wish to find out any other information regarding your Plan, please contact your financial adviser or contact us, see Contacts on page 17. 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 deposit without any interest. If we receive your cancellation form on or after the Start Date we will return the early withdrawal value of the Plan, which may be significantly less than your original investment, as described more fully in Can I withdraw my money before maturity?. If you cancel an ISA or ISA transfer there is a risk that the ISA status of your deposit will be lost. In our cancellation form we will ask you what you would like us to do with the funds. 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. If you do not cancel your money will remain invested in the Plan. 14

Can I withdraw my money before maturity? The Plan is designed to be held for the full five and a half year period until the Maturity Date, however you can withdraw all or part of your deposit early if you need to. There will be two Valuation Dates each month, on the 8th and 21st, when you can 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. Although you will not be charged any fee by RBS plc for withdrawing your investment before the Maturity Date, if you do withdraw early, you should be aware that we shall need to terminate contracts that we have entered into. Early termination of these contracts, which we put in place for each investment, will mean that, if you withdraw all or part of your investment before the Maturity Date, it is likely you will receive less than the value at maturity and you may well receive less than your original investment. You should be aware before making a withdrawal request that this shortfall could be significant. The amount you receive on any withdrawal (all or part) will be based on the early withdrawal value of the Plan on the Valuation Date we process your request and not on the early withdrawal value of the Plan on the day we receive your withdrawal request. RBS plc must always act in good faith when calculating the early withdrawal 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 and what current interest rates are, and the costs we incur in terminating the contracts. You can withdraw amounts equal to 500 or more but, if you do want to keep the Plan open, you must leave at least 500 deposited in it. If you want to transfer your ISA to another provider, the full ISA amount must be transferred, but such amount will be subject to the adjustments described above. Partial transfers are not permitted. 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 deposit, your Plan will remain open until we have received instruction from your personal representatives. If you made an ISA deposit, your ISA will lose its ISA tax status and will be closed automatically. The Plan will be continued as a Direct Account deposit 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 the current early withdrawal value of the deposit so they may receive back less than you originally deposited. Keep the Plan open and transfer it to a named beneficiary(ies) to continue the deposit 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 at maturity? On the Final Valuation Date, we will calculate the total return due to you. 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 endeavour to 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 your money 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 money to your nominated bank or building society account. 15

Further questions Do you provide additional support to advisers? We may provide 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 adviser or us. What are the compensation arrangements? Before the Start Date and after the Maturity Date During these periods your money will be held in a Client Money account at Lloyds TSB Bank plc. If during these times, Lloyds TSB Bank plc defaults or becomes bankrupt and you suffered a loss as a result of this, you may be eligible to claim compensation from the Financial Services Compensation Scheme (the FSCS ), up to 85,000. In the event that RBS plc itself defaults or becomes bankrupt during these periods your money will be returned to you as it is being held as protected Client Money segregated from RBS plc assets. From the Start Date to the Maturity Date For the duration of the five and a half year period until the Maturity Date, your money will be held on deposit with RBS plc. If RBS plc defaults or becomes bankrupt during this period you may be eligible to claim compensation from the FSCS, up to 85,000. The Financial Services Compensation Scheme The FSCS can pay compensation to depositors if a bank or building society 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 85,000. 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 85,000 each. The 85,000 limit relates to the combined amount of all the eligible depositor s accounts with a bank or building society, including their share of any joint account, and not to each separate account. You can find more information about the FSCS (including eligibility to claim) on their website, www.fscs.org.uk or by calling 0800 678 1100. 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 0800 032 4902. 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. 16

Contacts The Royal Bank of Scotland plc If you have any queries please contact us at: The Royal Bank of Scotland plc BNY Mellon House Ingrave Road Brentwood Essex CM15 8TG Tel: 0800 032 4902 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 121882. You can check this at: www.fsa.gov.uk/register or by contacting them on 0845 606 1234. 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 0800 032 4902 to request this. For general queries, text phone users can contact us (using the Typetalk service) by prefixing our number with 18001. 17

18 The RBS UK Balanced Sector Index is one of an exclusive range of indices that are created, owned and maintained by RBS plc

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 deposit programme, 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. Definitions Account The deposit account opened by RBS plc for your Deposit. An Account may be either a Direct Account or an ISA Account. 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. Cash ISA An Account established in accordance with the ISA Regulations and consists of a cash component only. Client Money Money held in accordance with the provisions of the FSA s Client Assets Sourcebook relating to client money. Deposit The initial deposit, the initial investment or the amount transferred from another Cash ISA deposited in the Account. Deposit Taker In this case RBS plc is the licensed deposit taker. Direct Account Any part of the Deposit that is not part of an ISA. Final Index Level The average of the closing levels of the Index on the 4th of each month from, and including, 4 October 2016 to, and including, 4 October 2017 (13 monthly observations in total), or the next Business Day when not a Business Day, subject to adjustment in accordance with the provisions of the deposit programme 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 October 2017, subject to adjustment in accordance with the provisions of the deposit programme 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 RBS UK Balanced Sector Index. 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 2012, subject to adjustment in accordance with the provisions of the deposit programme as set out on page 11 of this Plan brochure. ISA An 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 Account An Account opened by RBS plc in accordance with the ISA Regulations. ISA Investments Any assets, including the Deposit, 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. Maturity Date The date on which your original investment and any additional return due to you is paid into a Client Money account, pending your further instructions, and which will be 11 October 2017, subject to adjustment in accordance with the provisions of the deposit programme as set out on page 11 of this Plan brochure. Maturity Value The final value of the Deposit (together with any interest), calculated as set out in the Plan brochure. Plan The RBS UK Balanced Sector Deposit Growth Plan 3, comprising the deposits placed 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. Start Date The date on which the Deposit is placed with RBS plc, which will be 13 April 2012. Transfer Application Form An application form to transfer your investment in an existing ISA to an ISA Account 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 the 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 www.rbs.com and click on About Us. 19

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 deposit programme 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. We reserve the right to reject an application for any reason, including, specifically, a failure by your financial adviser to meet our requirements before the Initial Valuation Date. Since this failure may take place after the deadlines relating to the receipt of your completed Application Form and payments specified in the Plan brochure, we may be required to provide notice of rejection after such deadlines and therefore after we have indicated acceptance to you. In the event of an application being rejected, we will notify you and your financial adviser as soon as practicably possible. 1.4 Within 5 Business Days of accepting your application, we will confirm your application to open a Plan and confirm the date on which the Deposit was made. 1.5 Money held by RBS plc prior to 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 Cash 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 12 within 5 Business Days of the relevant Valuation Date so long as valid instructions have been received by 12 noon on the Business Day prior to that Valuation Date. 2.4 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 Deposit, but in a Direct Account and you will lose any favourable tax treatment applicable. 2.5 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. 2.6 Any ISA Investments shall be in, and must remain in, your beneficial ownership and must not be used as security for a loan. 3. Taxation 3.1 Under current legislation, a Deposit held within an ISA is not subject to UK Income Tax and any income on your Deposit will be disregarded for the purposes of the calculation of UK taxes. 3.2 Where, however, your Deposit is 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. These statements are based on current legislation, regulations and practice, all of which may change. 3.3 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. 3.4 If you are an individual ordinarily resident in the UK, eligible to be paid interest gross of tax, and wish to be paid interest gross of tax on a Direct Account, you can download an R85 form from HM Revenue & Custom s website at www.hmrc.gov.uk and send us your completed R85 form at: RBS Administration, BNY Mellon House, Ingrave Road, Brentwood, Essex CM15 8TG, together with a covering letter stating your customer reference. 20

4. Death In the event of your death, your ISA will lose its ISA status immediately, and any income after that date will not benefit from the ISA tax shelter. The Deposit 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 close the Plan or, subject to these Terms and Conditions, transfer your deposit to your beneficiary(ies). 5. 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 endeavour to meet your request within 5 Business Days of the Maturity Date or receipt of your instructions, if later. Payment(s) will be made in accordance with clause 12 and subject to any requirements under clause 17. 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. 6. Conflicts of Interest 6.1 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. 6.2 For the avoidance of doubt, nothing in this clause will restrict us from providing services to other customers. 7. Compensation 7.1 RBS plc is a 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, currently of up to 85,000. (c) If you are an eligible claimant under the compensation scheme rules, you may be entitled to compensation of up to 85,000 on our default when we hold the deposit. 7.2 Deposits with RBS plc, Direct Line, the One Account, Child & Co, Drummonds and Holts are all covered by a single FSA authorisation. This means the total deposits with these firms will count to one compensation limit. For further information on the conditions governing compensation and details on how to apply, please refer to the FSCS at www.fscs.org.uk. 8. Complaints 8.1 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. 8.2 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. 9. Cancellation Rights 9.1 RBS plc will give you the right to cancel your Plan within 14 days of our acceptance of your Application Form in accordance with the requirements of the FSA Rules. 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 the reference number with clear instructions to cancel your investment. 9.2 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 cash subscriptions 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 11.7), and you will receive your cash subscriptions, without any interest, after such Valuation Date. 9.3 If we receive your cancellation notice on or after the Start Date, we will return to you, without any interest, your cash subscriptions, but the amount repaid to you may be subject to a market value adjustment. 9.4 All cancellations will require full clearance of your original subscription (minimum 15 Business Days) and any requirements under clause 17 to be satisfied before we can issue payment to you. Interest will not be payable on such sums. 9.5 When cancelling an ISA investment, including ISA transfers, you may lose any favourable tax treatment applicable. 9.6 Where you do not exercise your cancellation rights, the Plan will continue in line with the Terms and Conditions. 21