Key Features of the Stocks & Shares ISA Reference NGS250/A 06.14 The Financial Conduct Authority is a financial services regulator. It requires us, Friends Life Investment Solutions Limited, to give you this important information to help you to decide whether our Stocks & Shares ISA 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. Where relevant information is contained in other documents these will be signposted at the appropriate point. You need to be comfortable that you understand the benefits and risks of this account before deciding whether to invest. The purpose of this document is to help you to make an informed decision. However, we recommend that you seek professional advice before you make any decisions about this account. The adviser may charge you for any advice provided. This document is aimed at someone taking out a new savings product.
Key Features of the Stocks & Shares ISA What is the Stocks & Shares ISA? The Stocks & Shares ISA is a tax efficient savings vehicle which offers you the facility to save regularly and/or make one-off payments within the annual ISA allowance set by HM Revenue & Customs (HMRC). When you pay into an ISA this is known as a subscription, but for the purpose of this document we will refer to all payments in as payments. How does the Stocks & Shares ISA work? It is provided by Friends Life Investment Solutions Limited and made available by your employer through My Money. Your employer can deduct regular and/or one-off payments from your salary after tax has been deducted, and forward the amount to Friends Life. You can also make payments from your own bank or building society account. You can transfer your existing Stocks & Shares ISAs and Cash ISAs to us. You can switch between different types of investments. If you stop working for your employer you can continue your Stocks & Shares ISA with us. Please see the Stocks & Shares ISA Fees and charges brochure for details of any charges that may apply. What is My Money? My Money is a website provided by Friends Life which allows you to apply for, contribute to, invest in and manage a range of retirement, savings and investment products online. Who can open a Stocks & Shares ISA? Anyone over the age of 18 (there is no maximum age limit) who is resident in the UK or who performs duties as a crown employee overseas, or who is married to or in a civil partnership with a person who performs such duties. Important: If you move aboard and do not meet the residency criteria, your Stocks & Shares ISA may remain open but you will not be able to make further payments until you meet the residency criteria again. Helping you decide This document gives you a summary of information about the Stocks & Shares ISA from Friends Life. It should be read with the Stocks & Shares ISA Fees and charges brochure. You should also: - Look at the details of the available investments that can be held within the Stocks & Shares ISA, which you can find on My Money. - Read the information we provide relating to the funds in which you are considering investing, such as fund factsheets and Key investor information documents. - Read the illustration on pages 6 and 7 that shows how much you may get back in the future. - Read the Friends Life Stocks & Shares ISA Terms and conditions. Friends Life does not advise whether the Stocks & Shares ISA or your chosen investments are suitable for your needs. Therefore you are not protected by the Financial Conduct Authority (FCA) rules on assessing suitability. If you have any doubts whether this account is suitable for your needs, you should contact a financial adviser for advice. If you do not have a financial adviser you can find one at www.unbiased. co.uk. You may be charged for this advice. Its aims To allow you to increase the value of your money. To allow you to invest in a tax efficient way through a wide range of investments. Your commitment Not to pay into another Stocks & Shares ISA in the same tax year that you pay into this Stocks & Shares ISA. To meet the minimum payment requirements of 25 a month for regular payments and 250 for one-off payments and maintain a minimum balance of 250 in the Stocks & Shares ISA. To view your investments as being held for the medium term which is at least 5 years, to long term which is over 10 years. To review your account regularly to ensure your chosen investments still meet your needs. To pay any fees or charges due. To understand the risks shown in the Risks section. 2
Risks We can t guarantee what your account will be worth in the future. There are a number of different reasons for this which include: - how much is paid in and how long payments are invested for - the performance of your investments - the charges that apply - any changes to tax rules, for example, a change could reduce the current favourable tax treatment of ISAs. The value of your account can fall as well as rise and is not guaranteed. You could get back less than you ve paid in. 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. The investments available to you carry different levels of risks. The value of some investments will go up and down more than others. If you deal in stocks and shares excessively, or your account is relatively small, then the value of your Stocks & Shares ISA may be eroded by dealing charges and the costs may be disproportionate. Please see the Stocks & Shares ISA Fees and charges brochure for more details. The available investments are designed for the medium term which is at least 5 years, to long term which is over 10 years. These are not suitable if you need your money in the short term. Inflation will reduce the spending power of the overall return of your Stocks & Shares ISA. Questions and answers 1 Can I change my mind? Yes, you have the right to change your mind. You will have 30 days to cancel from the day you have been told by us that we have accepted your application or, if the first payment is a transfer from another ISA, from the date on which we receive that transfer payment. We will always pay back the amount of the payment. If it goes up in value we will keep the profit and return the original amount. If it goes down we will suffer the loss and pay back the original amount. If you cancel your Stocks & Shares ISA within this period, your Stocks & Shares ISA will be closed and any payment(s) received will not count towards your Stocks & Shares ISA allowance. We will return any payment(s) to whoever paid it to us, for example, if it was a payroll payment it will be returned to your employer to pass onto you. If you have opened your account by transferring funds from another ISA but subsequently want to cancel your account within the cancellation period, you should instruct us to transfer the funds either: - back to the original ISA provider (if that provider will accept them); or - to a new ISA provider. Note all investments will be sold even where the transfer into your account was completed by re-registering your investments. For selling re-registered investments, we will deduct the sale transaction charges plus any levy due to the PTM. If the balance returned to you includes any payments made during the current tax year, your ISA allowance for the current tax year will be lost. If you close your Stocks & Shares ISA outside the 30 day cancellation period, you will have opened a Stocks & Shares ISA for the current tax year and will not be able to open another Stocks & Shares ISA in the same tax year. If you don t cancel within the 30 days, your Stocks & Shares ISA will continue as set out in the Key features and Terms and conditions. 2 How can I apply for a Stocks & Shares ISA? You can apply for a Friends Life Stocks & Shares ISA through My Money by following the application process set out by your employer. You must notify us in writing at Friends Life, PO Box 2282, Salisbury, SP2 2HY, United Kingdom in this period if you wish to cancel your application. You will not receive a reminder of your right to cancel. 3
Key Features of the Stocks & Shares ISA 3 What do I need to know about payments into my Stocks & Shares ISA? This section provides important information about your payments into the Friends Life Stocks & Shares ISA. How many ISAs can I pay into each tax year? You can pay into one Cash ISA and one Stocks & Shares ISA in each tax year although there are limits to the amounts which you can pay. The two ISAs can be with either the same or different ISA providers. What s the minimum I can pay to my Friends Life Stocks & Shares ISA? The minimum monthly payment through your payroll, or by direct debit, from your bank or building society account is 25 a month or 250 a year. The minimum one-off payment through your payroll is 250. The minimum transfer we accept from a current tax year s Stocks & Shares ISA or Cash ISA is 50. The minimum transfer we accept from a previous tax year s Stocks & Shares ISA or Cash ISA is 250. The minimum transfer we accept from both (current and previous) tax years is 50 if they are transferred at the same time. What s the maximum I can pay into an ISA? The annual ISA allowance is set by HMRC each year. For the period starting on 6 April 2014 to 30 June 2014, the total ISA allowance is 11,880. Up to 5,940 of that amount can be saved in a Cash ISA. The remainder of the 11,880 can be invested in a Stocks & Shares ISA. For example you could pay: 5,940 to a Stocks & Shares ISA and 5,940 to a Cash ISA, or; 7,000 to a Stocks & Shares ISA and 4,880 to a Cash ISA, or; 11,880 to a Stocks & Shares ISA and nothing to a Cash ISA. HMRC have introduced new rules which come into effect from 1 July 2014. The overall ISA allowance will increase to 15,000 and will apply until 5 April 2015. The 15,000 ISA allowance can be split between the Cash ISA and Stocks & Shares ISA in any combination. If you have already paid the full ISA allowance between 6 April 2014 and 30 June 2014 you can make further payments up to the maximum of 15,000 after 1 July 2014. Can I alter my payments? Yes, you can change the amount you pay, subject to you paying within the minimum and maximum amounts, at any time. The value of any additional investment can fall as well as rise and is not guaranteed. You can stop and restart payments at any time, providing you are eligible for an ISA. There are no charges for altering payments. Can I transfer an existing Stocks and Shares ISA or Cash ISA into my Stocks & Shares ISA with Friends Life? You can transfer all of a current tax year s Cash ISA and/or some or all of previous tax year(s) Cash ISA to your Stocks & Shares ISA with Friends Life. You can transfer all of a current tax year s Stocks & Shares ISA and/or some or all of previous tax year(s) Stocks & Shares ISA from another ISA provider to your Stocks & Shares ISA, in the form of cash. You may be able to transfer your previous Stock & Shares ISA by re-registering the investments into this Stocks & Shares ISA. Please also see the Can I change my mind? section on page 3. For details of the minimum transfer amounts, please see the What s the minimum I can pay to my Friends Life Stocks & Shares ISA? section on this page. We do not charge for transfers into your account but you should check with your existing provider if they will charge you. You should compare the features of the two ISAs before you transfer. If you transfer a Cash ISA to a Stocks & Shares ISA your money will no longer be held in cash. It s value could go up and down depending on investment performance. You could get back less than you ve transferred. You should make sure you have enough easily accessible cash to meet any short-term needs. 4 What can I invest in? You can choose from a wide range of investments, such as funds, stocks and shares. Full details on where you can invest are on My Money. Your payments will be placed in your cash account within the Stocks & Shares ISA until you tell us where to invest them. Once payments have cleared they are then available for you to invest. No interest is paid on money held in your cash account. 4
Can I switch between investment funds? Yes you can normally switch between investment funds at any time. Switching funds consists of two parts selling the existing investment and buying the new investment. The sell part of the transaction will commence and once the monetary amount is known the buy part can commence. The timings will depend on the fund managers processes. Can I redirect my future payments to different investment funds? Yes you can. Your new payments will go towards your new investment choice and your existing holding will remain as it is until you instruct us otherwise. 5 Are there any charges on my Friends Life Stocks & Shares ISA? Yes, there are charges. Opposite is a list of the charges you could pay for this Stocks & Shares ISA. However you will only be charged for the services that you use; if you don t use it you will not be charged for it. For full details of the charges please see the Stocks & Shares ISA Fees and charges brochure. Friends Life charges: Scheme annual management charge for running your account. It is a percentage amount of your account value which is calculated and accrued daily and deducted monthly. The Scheme annual management charge for your account is shown in the Stocks & Shares ISA Fees and charges brochure. You have two withdrawals each tax year which do not have a charge. Any subsequent withdrawals will have a 50 withdrawal charge. CHAPS payment of 25 if you make a withdrawal and want to receive the funds on the same day. A 10 charge if you require an additional paper statement. If your account has any discounts applied the details will be shown in the Stocks & Shares ISA Fees and charges brochure. Fund additional expenses, a percentage of the fund value. This charge could change over time. Dilution levy, a charge which might be levied by the fund manager to protect the interests of investors at a time of high levels of buying or selling. Bid-offer spread, the difference between the bid (selling) price and the offer (buying) price is called the bid-offer spread; the bid-offer spread charge includes initial charges and dealing costs. Dilution adjustment, a charge applied by managers of single-priced funds to protect the value of existing investors holdings if the dealing costs are higher than expected due to a large number of sales or purchases. Investment charges (shares and other exchange traded assets): Transaction charge of 20 every time you buy or sell an investment through our stockbroker partner. Stamp Duty Reserve Tax of 0.5% of the purchase price of UK shares. PTM (Panel on Takeovers and Mergers) Levy is 1, payable when buying or selling shares with a total value in excess of 10,000. If your account is subject to scheme adviser remuneration, this will be detailed in the Stocks & Shares ISA Fees and charges brochure. What are the effects of charges and expenses on my Stocks & Shares ISA? The following tables show the possible effects of charges and expenses based on a one-off payment of 1,000 and a 50 a month payment for ten years for two different funds, as an example. The figures shown in these tables are not guaranteed and are for illustrative purposes only to show the effect of charges on your investment. The value of your investment can fall as well as rise and you might get back less than the amounts shown. Charges and expenses may change in the future. The figures have been rounded down to three significant figures. Investment charges (funds): Fund managers can make the following charges: Fund annual management charge, a percentage of the fund value. 5
Key Features of the Stocks & Shares ISA We have used a mid growth rate of 5% in line with FCA guidance. This growth rate is not appropriate for all funds, such as cash funds, as these funds would be likely to grow at a lower rate. Monthly payments of 50 At the end of year Investment to Effect of deductions to What you might get back ( ) The charges are: Fund annual management charge of 0.75% with additional annual fund expenses of 0.10% making a total annual fund charge of 0.85%. Friends Life Scheme annual management charge of 0.5%. An employer s adviser remuneration charge of 0.25% of your account value. These charges are examples. The actual Friends Life Scheme annual management charge and the employer s adviser remuneration (if applicable) are shown in the Stocks & Shares ISA Fees and charges brochure. The total charges you will pay depend on the fund you invest in. This is shown when you invest on My Money and the fund annual management charge is shown in the fund manager s literature, also available on My Money. 1 600 5 610 3 1,800 48 1,890 5 3,000 140 3,260 10 6,000 639 7,110 The last line of the table shows that at the end of year 10, charges and expenses could amount to 639 and you might get back 7,110. This would have the same effect as reducing growth from 5% to 3.3% a year, a reduction of 1.7% a year. An example Growth Fund Growth funds aim to achieve capital appreciation by investing in growth stocks. They focus on companies that have significant earnings or revenue growth, rather than companies that pay high dividends. The hope is that the companies continue to increase in value, allowing the fund to increase in value. A one-off payment of 1,000 At the end of year Investment to Effect of deductions to What you might get back ( ) 1 1,000 16 1,030 3 1,000 54 1,100 5 1,000 98 1,170 10 1,000 240 1,380 The last line of the table shows that at the end of year 10, charges and expenses could amount to 240 and you might get back 1,380. This would have the same effect as reducing growth from 5% to 3.3% a year, a reduction of 1.7% a year. 6
An example Income Fund Income funds focus on investments that produce an income as opposed to focussing on just the capital appreciation of the fund. It will invest in assets that aim to pay higher interest or dividends which can be distributed to investors. A one-off payment of 1,000 Income taken Income reinvested At the end of year Investment to Effect of deductions to Income paid out to What you might get back ( ) Effect of deductions to What you might get back ( ) 1 1,000 16 20 1,010 16 1,030 3 1,000 52 61 1,030 54 1,100 5 1,000 93 104 1,060 98 1,170 10 1,000 219 216 1,130 240 1,380 The last line of the table shows that at the end of year 10, charges and expenses could amount to 240 and you might get back 1,380 if you reinvest your income. This would have the same effect as reducing growth from 5% to 3.3% a year, a reduction of 1.7% a year. Monthly payments of 50 Income taken Income reinvested At the end of year Investment to Effect of deductions to Income paid out to What you might get back ( ) Effect of deductions to What you might get back ( ) 1 600 5 9 601 5 610 3 1,800 47 64 1,820 48 1,890 5 3,000 135 169 3,080 140 3,260 10 6,000 598 662 6,370 639 7,110 The last line of the table shows that at the end of year 10, charges and expenses could amount to 639 and you might get back 7,110 if you reinvest your income. This would have the same effect as reducing growth from 5% to 3.3% a year, a reduction of 1.7% a year. Notes applicable to all the above The figures in all example tables assume that you do not make any withdrawals from your account. Income fund tables the current yield is 2% each year convertible half-yearly with the income paid out every six months commencing in six months time. The examples relate to fund charges only. If you invest in exchange traded assets, e.g. shares, other charges will apply. For full and specific details of the fees and charges payable under this product, please read the Stocks & Shares ISA Fees and charges brochure. 7
Key Features of the Stocks & Shares ISA 6 What else do I need to know? This section provides other important information you need to know about your Friends Life Stocks & Shares ISA. How do I keep track of my Friends Life Stocks & Shares ISA? You can keep track of your transactions and current balance in your Stocks & Shares ISA by logging into My Money. Once you have opened your Stocks & Shares ISA you will receive an Account schedule detailing your regular and/or one-off payments. For each additional one-off payment you will receive a further Account schedule. You will receive an annual statement. What will happen if I leave my current employer? If you stop working for your employer you can continue your Stocks & Shares ISA with us. Please see the Stocks & Shares ISA Fees and charges brochure for details of any charges that may apply. Can I transfer out of my Friends Life Stocks & Shares ISA? From 6 April 2014 to 30 June 2014 you can transfer your current tax year s Stocks & Shares ISA in whole, but not in part, to another Stocks & Shares ISA. From 6 April 2014 to 30 June 2014 you can transfer your previous tax year(s) Stocks & Shares ISA in whole, or in part, to a Stocks and Shares ISA. We can transfer your Stocks & Shares ISA investments, in respect of current or previous years, by re-registration, providing that they can be accepted. From 1 July 2014 you can transfer your current tax year s Stocks & Shares ISA in whole, but not in part, to another Stocks & Shares ISA or a Cash ISA. From 1 July 2014 you can transfer your previous year(s) Stocks & Shares ISA in whole, or in part, to another Stocks and Shares ISA or a Cash ISA. Transfers from Stocks and Shares ISAs to Cash ISAs can only be done in cash. A transfer out is regarded as a withdrawal and therefore a withdrawal charge may also apply. Can I withdraw my savings from my Friends Life Stocks & Shares ISA? Yes, you can request a withdrawal of all or some of your savings by contacting the Friends Life Customer Services team. You have two withdrawals each tax year which do not have a charge. Any subsequent withdrawals will have a 50 withdrawal charge. The minimum withdrawal amount from the Stocks & Shares ISA is 100. Following a withdrawal, if you want to keep the account open you must keep a minimum amount of 250 in your Stocks & Shares ISA. You can only withdraw money from your cash account, which is held within your Stocks & Shares ISA. If you have insufficient cash for your intended withdrawal, you must sell some or all of your investments first to fund your withdrawal. If investments have to be sold, the trade will need to settle before the withdrawal can be made, so this could take up to five working days. Withdrawals will be paid to you by Bacs, normally within five working days of us receiving your request or the trades being settled. It is not possible to set up automatic regular withdrawals. What happens to my Friends Life Stocks & Shares ISA if I die? Investments will be retained within your Stocks & Shares ISA until we receive instructions from your personal representatives. We will continue to take any charges as described in the Are there any charges on my Friends Life Stocks & Shares ISA? section on the previous page. The remaining value of your Stocks & Shares ISA will be paid to your estate upon receipt of the relevant evidence of death and entitlement of your personal representatives to administer your estate. There may be a Capital Gains Tax charge on gains made after your death. Please refer to the Stocks & Shares ISA Fees and charges brochure for details of all charges. 8
7 What about tax? The following information is based on our interpretation of current tax legislation. The tax treatment depends on your individual circumstances and may be subject to change in the future. What is the tax position of a Stocks & Shares ISA? All investments within your Stocks & Shares ISA are free from Capital Gains Tax. Income from investments, such as dividends, is free from Income Tax. Tax paid on dividends is at the reduced rate of 10%. This is deducted from the dividend before it is paid into your account. You are not usually required to declare any capital gains or income from your Stocks & Shares ISA on your self assessment tax return. If you die the proceeds will normally form part of your estate for inheritance tax purposes. Tax rules may change. Other information How to contact us Call us on 0845 604 9915 Your My Money helpline is available Monday to Friday between 8am and 5.30pm. Please note that Friends Life may record calls to improve service. Calls may be charged and these charges may vary, please speak to your network provider. Email us at mymoney@friendslife.co.uk Write to us at Friends Life, PO Box 2282, Salisbury SP2 2HY, United Kingdom How to complain Please contact our Customer Relations Manager using details in the How to contact us section above. To see our procedures for dealing with complaints, please ask for our We Listen leaflet. If you are not satisfied with our response, you can contact: Financial Ombudsman Service South Quay Plaza 183 Marsh Wall London E14 9SR Telephone 0800 023 4567 or 0300 123 9123 Website www.financial-ombudsman.org.uk Email complaint.info@financial-ombudsman.org.uk Making a complaint won t affect your legal rights. Compensation If a financial adviser recommends this account, you have a legal right to compensation if the Financial Ombudsman Service decides it wasn t suitable for your needs at the time. We are covered by the Financial Services Compensation Scheme (FSCS). If we cannot meet our obligations you may be entitled to compensation under the scheme. This depends on the type of business and the circumstances of the claim. Some types of investment business may be covered up to a maximum per eligible claim of 100% of the first 50,000 of the value of the investment. The FSCS does not apply to any funds that are not authorised by the FCA. Such funds may be covered by a local compensation arrangement. Please read the fund manager s fund literature for more details. Direct investments in stocks and shares are not covered by the FSCS. 9
Key Features of the Stocks & Shares ISA Money held within the cash account will be deposited with HSBC Bank plc. HSBC Bank plc is incorporated in England and Wales and established at 8 Canada Square, London E14 5HQ which is its Registered Office. Deposits with HSBC Bank plc are covered by the FSCS. The FSCS can pay compensation to depositors if a bank is unable to meet its financial obligations. An eligible depositor is entitled to claim up to 85,000 (this limit includes all other accounts and deposits they may hold with HSBC). All claims have to be assessed by the FSCS to determine the amounts covered and the claimant s eligibility. For further information see www.fscs.org.uk or call the FSCS on 0800 678 1100 or 0207 741 4100. Financial advisers Where you have received information or advice from a financial adviser they will provide you with information regarding their identity, the capacity in which they are acting and their address for future communications. About Friends Life The provider of this account is Friends Life Investment Solutions Limited. Its main business is providing administration of investment business. It s entered on the Financial Services Register, number 515334. www.fca.org.uk Client categorisation Friends Life categorises each investment customer as a retail client. This gives you the highest level of protection available under the Financial Conduct Authority (FCA) s Conduct of Business Rules. If you would otherwise be categorised under FCA Rules as a professional client or an eligible counterparty then you may not have access to the Financial Services Compensation Scheme or Financial Ombudsman Service. Please contact your financial adviser if you require further details. Terms and conditions This document sets out the main points about the Stocks & Shares ISA. It doesn t include all the definitions, exclusions, terms and conditions. You can view the Terms and conditions through My Money or you can ask the Friends Life Customer Services team for a copy. We have the right to change some of the terms and conditions. We ll write and explain if this happens. Tax information is based on our current understanding of tax legislation. Law and language This account is governed by the law of England and Wales and will apply unless your account documents or Terms and conditions show otherwise. Your account documents, Terms and conditions and all other communications will be in English. 10
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This document is available in other formats. If you would like a braille, large print or audio version of this document, please contact us. Friends Life Investment Solutions Limited An incorporated company limited by shares and registered in England and Wales, number 6389025. Registered office: Pixham End, Dorking, Surrey RH4 1QA. Authorised and regulated by the Financial Conduct Authority. Telephone 0845 602 9189 calls may be recorded. www.friendslife.com Friends Life is a registered trade mark of the Friends Life group. My Money is a registered trade mark of the Friends Life group. NGS250/A 06.14 (43918) TEMP_NGS_Savings_KFD v1.0 Jan 2014 (39125)