Terms and conditions of the New Generation Personal Pension SIPP Option execution-only stock broking and fund supermarket. Reference MPEN8/D 09.

Transcription

1 Terms and conditions of the New Generation Personal Pension SIPP Option execution-only stock broking and fund supermarket Reference MPEN8/D 09.14

2 Contents Page Our appointed stockbroker 3 Responsibility and liability 3 Events or circumstances beyond our control force majeure events 3 Corporate actions 3 Dealing using the execution-only stock broking and fund supermarket service 4 Purchases 4 Sales 4 Dealing price 4 Limit orders 4 Open ended investment companies (OEICs) and unit trust orders 4 Dealing charges 5 Available investments 5 Non-permitted investments 5 Restrictions on investments 5 Portfolio screen/valuations 5 Execution policy 5 Investment risk warnings 6 Investment glossary 6

3 Terms and conditions of the New Generation Personal Pension SIPP Option execution-only stock broking and fund supermarket This document sets out the Terms and conditions of the execution only stock broking and fund supermarket service available through your New Generation Personal Pension Self Invested Personal Pension (SIPP) Option. Our appointed stockbroker Although your dealing instructions are given to our New Generation Pension SIPP Option administration team, we do not act as the stockbroker for your Personal Managed Portfolio (PMP). We have appointed Selftrade to provide us with a stock broking and fund supermarket service. We reserve the right to appoint alternative and/or additional companies in the future to provide these services. We provide access to a range of investments through your PMP. There is no direct obligation or contractual relationship between you and our stockbroker. Responsibility and liability Friends Life does not accept any liability for the performance or choice of any investment. The investments available from the execution-only stock broking and fund supermarket service may be selected by: 1 you, using your own judgement; and/or 2 you, on the advice of one or more advisers or investment managers selected by you. Subject to the restrictions on permitted investments, explained later in this document, you will be responsible for agreeing the investment strategy with any investment manager appointed in respect of your plan. We can direct disposal of SIPP investments where appropriate. We also reserve the right to refuse to allow any investment at our discretion at all times acting reasonably. We do not act as an investment manager or adviser and therefore are unable to give you any investment advice. Events or circumstances beyond our control force majeure events We shall not be liable to pay you, or any other person, any compensation for any loss due to an event or circumstance beyond our control. This includes loss caused by any delay in performing our obligations due to restrictions imposed upon us by law or regulation. Corporate actions The term corporate actions refers to various things that companies can do which affect the number of shares in issue. Examples are: takeovers/mergers; bonus/scrip issues; share splits; buybacks; rights issues; consolidations. If your PMP holds shares affected by one of the above events this could affect your holding in a number of ways: The number of shares you have could change; The ratio of your holding to the total number of shares in issue could change; The acquisition cost of your shares could change; As there are certain rules which apply to pension investments, a corporate action may mean that you can no longer hold a specific holding in your PMP. If an investment that you hold within your PMP is subject to a corporate action, we will write to you if you need to make a decision. Our letter will outline your options together with the default action we will take if we do not hear from you before the deadline we set. We will not send you any reminders after the initial letter. If the action requires you to make a payment, you will need to ensure that there are sufficient cleared funds in your PMP cash account at a specific date. If timescales are particularly tight, we may contact you by telephone to ensure that you receive details in sufficient time to make a decision and provide necessary funds where appropriate. If you do not have to make a decision about a corporate action we will not write to you about it but you will see details on your monthly PMP cash account statement, if there is a cash element. 3

4 Terms and conditions of the New Generation Personal Pension SIPP Option execution-only stock broking and fund supermarket Dealing using the execution-only stock broking and fund supermarket service To place a deal within your PMP you will need to call our New Generation Pension SIPP Option administration team. Once you have been told you can start to deal using your cleared funds, you can deal by telephone on Deals can be placed between 8.00am and 4.30pm, Monday to Friday (excluding bank holidays). However, please note, although we will endeavour to place deals received after 4:00pm by the close of the UK stock market on that day, this may not be achievable and you may have to re-instruct us on the next business day. You will be advised at the time if this is the case. Please have your scheme and member number ready when you call to place a deal. We will carry out data protection checks to confirm your identity. Your telephone calls to us may be recorded. If you instruct us by letter please ensure you quote your name, scheme and member number on all correspondence. We will accept instructions on the following basis: Friends Life will take instructions received from: a you; or b an authorised person (for example, your investment manager) provided that you have previously advised Friends Life in writing that such person is authorised to give such instructions on your behalf. Purchases For purchases you must specify an amount of money to invest that is no greater than the available cash in your PMP cash account. This amount must include the cost of the trade. (Please note: some investments may only deal in round amounts or have a minimum amount that can be traded. We will tell you if this applies to you at the time of the trade.) You must also specify the exact security name and type (as a company will often have different lines of security, e.g. ordinary shares, preference shares, loan stock, etc.). We reserve the right to request confirmation and re-confirmation (by telephone and/ or in writing and/or by facsimile) of your investment instructions prior to effecting any such instruction. Friends Life will not be liable for any loss resulting from any such instruction or from any delay while confirmation is obtained. Sales For sales you must specify the number of shares or units of the security to sell, not an amount of cash to be raised. (Please note: some investments may only deal in round amounts or have a minimum number that can be traded. We will tell you if this applies at the time of the trade if known.) 4 We will only accept orders to sell securities that you hold in your PMP, i.e. they have been purchased and settled. Once we have received an order you will not be able to change it, except in the case of orders pending execution, such as limit orders. Dealing price For all trades, we will tell you the dealing price before the trade is confirmed (except where assets are forward priced). There is a maximum 15 second window to confirm acceptance of the quoted price. If you do not accept the price offered, a new price can be obtained which will again be subject to a 15 second window. It may be helpful if you have some idea of the price you are expecting before you issue your instructions. Limit orders Where you place a limit order, this will only be good for that business day (from 8.00am to 4.30pm). We may need to contact you to discuss the trade if it has not been possible to complete it by 4.00pm, so a contact telephone number may be requested. If the limit order relates to a security traded on an overseas market, the business day will end at the close of that market s business day. Open ended investment companies (OEICs) and unit trust orders Orders in unit trusts and OEICs will normally be for the earliest possible execution. If we receive your order or instructions before the time specified by us, we will submit your instructions to the appointed stockbroker for execution the same business day. Orders received after this time will not usually result in execution until the following business day or until the next available dealing point for the specified investment. Our appointed stockbroker reserves the right to cancel a transaction without notice where they believe there is sufficient justification. This may include, for example (and without limitation), circumstances where they are requested to do so by their counterparty or the relevant exchange, or where they believe it is necessary to maintain an orderly market. Our appointed stockbroker shall not be liable for any loss or expense you incur as a result of the cancellation of a transaction in such circumstances. In all cases, our stockbroker reserves the right, at their absolute discretion, at any time to refuse to accept our order in respect of your PMP and you agree that we shall have no obligation to inform you of the reasons. Our appointed stockbroker will provide best execution on all transactions where it applies in accordance with, and as defined by, the Financial Conduct Authority (FCA) rules and the rules of the relevant exchange. Where the market is overseas, prices may reflect local charges. In overseas

5 markets our stockbrokers may use local agents and such markets or agents may levy additional charges. In such circumstances, the stockbroker may rely on its local agents to obtain best execution. If our stockbroker accepts your instructions or orders, they will use reasonable endeavours to carry them out. However, our stockbroker will not be liable for any loss or expense you incur if they are unable to do so for whatever reason or if there is a delay or change in market conditions before the transaction is effected. Dealing charges Our current stockbroker service includes an annual account maintenance charge of 25 and a charge of 25 per transaction when you buy or sell investments. Available investments The following types of investments are available: Unit trusts/oeics; Investment trusts; Real estate investment trusts (REITs); UK shares including AIM listed stock; Overseas equities; Exchange traded funds (ETFs); Gilts; Corporate bonds. Some of these investments are subject to conditions. OEICs and unit trusts must be able to be held in the broker s nominee and fall into one of the following categories: It is listed on a HM Revenue & Customs (HMRC) recognised stock exchange; It is incorporated in the UK and is authorised by the FCA; It is constituted in a European Economic Area (EEA) member state, is duly authorised by the appropriate authorities in that member state and is an FCA recognised scheme under Section 264 of the Financial Services and Markets Act 2000; It is constituted outside the UK and EEA but is managed in a designated country or territory and the authorisation requirements under Section 270 FSMA 2000 are satisfied. Whether a hedge fund is permissible or not depends on where the shares are listed or how the OEIC is constituted. Provided they fall into the conditions required for OEICs, they can be traded electronically and held in a nominee status, they are acceptable. However, some hedge funds are not allowed because of their infrequent valuations and the difficulty experienced with their acquisition and disposal. REITs must be listed on a recognised stock exchange like shares of common stock in other firms. All investments we allow, including investment trusts, shares (ordinary and preference), ETFs, fixed interest securities, venture capital trusts (VCTs), permanent interest bearing shares (PIBs), debenture stock and other loan stocks must be CREST eligible and listed or dealt in on a stock exchange as recognised by HMRC, including the Alternative Investment Market (AIM), but excluding OFEX and accessible by our appointed stockbroker. Non-permitted investments There are a number of investments that we do not allow: direct commercial property investment; tax-exempt unauthorised unit trusts and traded endowment policies; derivatives; contracts for differences; options and futures; trustee investment plans; other insurance companies funds; warrants and convertible securities. Restrictions on investments Assets cannot be lent to or deposited by way of capital with a third party and, in respect of the scheme, money cannot be borrowed against the security of assets. Portfolio screen/valuations Your portfolio can be viewed online by logging in to Execution policy This policy applies to investment transactions carried out within the Personal Managed Portfolio fund of the New Generation Group Personal Pension Self Invested Personal Pension (SIPP) Option. The execution policy is available on request from our New Generation Pension SIPP Option administration team. 5

6 Terms and conditions of the New Generation Personal Pension SIPP Option execution-only stock broking and fund supermarket Investment risk warnings The cost effectiveness of managing your investments through your PMP may depend on a number of factors, including: the value of your PMP relative to the set-up, maintenance and transaction costs, and the discretionary fund management service and investment adviser fees; the type of investments held; the frequency with which you deal and the size of the transaction you undertake. If your portfolio value is relatively small, then the value of your PMP may be eroded and the costs may be disproportionate. We don t guarantee the value of your PMP. It can go up and down depending on how well the investments perform. You could get back less than you ve paid in. The value of overseas investments can go up and down simply because of changes in currency exchange rates. Some investments carry a higher level of risk than others, and may be subject to sudden and large falls in value, you could get back nothing at all. High-yielding bonds are usually lower grade. These carry an increased risk both to the income and capital value of the investment. Friends Life can directly dispose of SIPP investments where appropriate. Friends Life may delay acting, or refuse to act, on your instructions in the following circumstances: If Selftrade s system is unavailable at any time (this may happen, for example, due to maintenance or error rectification); If any of these Terms and conditions have not been met; If we are not reasonably satisfied that the transaction or the instruction is lawful; If we reasonably consider that our plan has been or is likely to be misused; For fraud prevention purposes; If we are required to do so by money laundering regulations; If we reasonably consider that the instructions are unclear or incomplete; If there are insufficient funds in the cash account to comply with your instructions or the transaction would lead to your cash account being overdrawn. We are not authorised by the Financial Conduct Authority (FCA) as an investment manager or adviser and therefore are unable to give investment advice in this regard. Friends Life does not accept any liability for the performance or choice of any investment. If you are in any doubt about an investment choice please refer to your financial adviser. For more information on the risk factors please refer to Your guide to the New Generation Personal Pension Self Invested Personal Pension (SIPP) Option brochure. Investment glossary This section explains what we mean by various expressions that we use in this document. Alternative investment market (AIM) A market for small, young and growing companies operated by the London Stock Exchange as a regulated market of a Recognised Investment Exchange and set up in June It replaced the Unlisted Securities Market (USM). The market provides an opportunity for companies to raise capital for expansion, a trading facility and a way of establishing a market value for their shares. Best execution/ at best A commitment to obtaining the best price for the relevant order dealing at best. Business day This is the part of the day in which our business operates. The dealing line is open between 8.00am and 4.30pm, Monday to Friday (excluding bank holidays). Corporate action An activity initiated by a company that affects the nature and/or quantity of stock, e.g. a rights issue is a common type of corporate action. Corporate bonds Corporate bonds are issued by companies to raise capital. They are an alternative to issuing new shares on the stock market (equity finance) and are a form of debt finance. Collective investment A general term encompassing authorised unit trusts, insurance and pension funds, OEICs and investment trusts. CREST eligible CREST is an electronic system of settlement for the equities market in the UK and Ireland. Debenture stock A type of long term bond (loan), taken out by a company, which it agrees to repay at a specified future date. 6

7 Derivatives A collective term for securities whose prices are based on the prices of another (underlying) investment. Execution-only Where the stockbroker buys and sells at your request with no advice to you on the advisability of that transaction. Exchange traded funds (ETFs) ETFs are a new kind of collective investment fund competing with investment trusts and unit trusts for investors money. They are similar to index-tracking funds in that they pool the cash of a large number of investors and invest in a basket of shares in companies that make up an index. Forward priced Most unit trusts are forward priced so the actual cost of a purchase or the proceeds of sale cannot be confirmed at the time of instruction. An indicative price will be given for these deals. Fixed interest securities Securities which pay a fixed rate of interest. Government bonds (gilts) are the best known example. Gilts Gilts are fixed income or index-linked bonds issued by the UK Government. Hedge funds A fund which is managed aggressively to get maximum rates of returns by using derivatives and swaps, selling short, and using arbitrage techniques. HMRC HM Revenue & Customs. Investment trusts A company quoted on the London Stock Exchange which invests its shareholders funds in the shares of other companies. OFEX OFEX is the UK s independent public market, dedicated to smaller companies and based on a quote driven trading platform, but it is not a recognised exchange. Open ended investment company (OEIC) A hybrid investment fund that has some of the features of an investment trust and some of a unit trust. Ordinary shares Shares, which are also known as equities, are a stake in a company that confer ownership rights to the stakeholder. Ordinary shares have: no right to receive a dividend payment is at the discretion of the company; a right to vote; no limit on the right to participate in the assets of the company if it is wound up. Permanent interest bearing shares (PIBs) Shares issued by building societies which pay a fixed rate of interest rather than a dividend. For the building societies concerned, they are a way of raising money without demutualising. Permitted investments These are the investments we allow you to invest in and are explained in the section Available investments. Personal Managed Portfolio (PMP) The part of your plan that is invested in assets chosen by you, including stocks and shares, government and corporate bonds, and collective investments. Preference shares Shares in a company which give their holders an entitlement to a fixed dividend but which do not usually carry voting rights. Limit order (placing of) The practice of setting a maximum buying price or minimum selling price you are prepared to respectively pay or accept for shares or commodities, etc. 7

8 Terms and conditions of the New Generation Personal Pension SIPP Option execution-only stock broking and fund supermarket Real estate investment trusts (REITs) A publicly traded investment trust which invests the capital of its shareholders in real estates. Rights issue A privilege allowing existing shareholders to buy shares of a new issue of common stock before it is offered to the public. Scrip issue A scrip issue is the issue of new shares to existing shareholders at no charge, pro rata to their existing shareholdings. Unit trusts A unit trust is a UK based collective investment scheme (pooled fund), where property is held in trust for the participants, each of which has an interest defined by the number of units they own. Venture capital trusts (VCTs) A type of investment trust which invests in small unquoted companies with assets under a given size, including AIM and OFEX companies, and which is designed to attract risk capital from higher rate taxpayers by giving them tax concessions. Share split A corporation whose stock is performing well may choose to split its shares and distribute additional shares to existing shareholders. A share split is an increase in the number of outstanding shares of a company s stock, such that the proportionate equity of each stakeholder remains the same. Self Invested Personal Pension (SIPP) A SIPP is a form of personal pension giving the holder control over how the fund is invested. The New Generation Personal Pension has a SIPP Option which means that, subject to eligibility, you can have access to a wider range of investments. The scheme Friends Life (No.4) Personal Pension Scheme. Friends Life and Pensions Limited An incorporated company limited by shares and registered in England and Wales, number Registered office: Pixham End, Dorking, Surrey RH4 1QA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Telephone calls may be recorded. Friends Life is a registered trade mark of the Friends Life group. MPEN8/D (44431)