If you like the idea of a return linked to FTSE 100 growth, but are concerned by the unpredictability of the markets, the Kickout Bond, provided by Credit Suisse, may offer you a solution, with the potential for an early return on three kickout dates.
How the bond works
The Kickout Bond is designed to offer you potential returns dependent on the performance of the stock market with your initial investment being repaid in full at the earlier of the maturity date or kickout dates, provided it is held for the required investment term.
You can invest in the bond on a tax free basis by using your Cash ISA allowance or by transferring an existing Cash ISA. Otherwise, your investment will be considered a direct deposit where the returns are subject to tax.
If you hold the account until the maturity date, or it kicks out on any of the kickout dates, you will receive your capital back, plus:
- the growth return applicable at the kickout dates;
- if it continues to the maturity date, the equivalent of 100% of the positive growth of the FTSE between the Starting Value and the Final Value on your investment – subject to 'Averaging' set out below.
| Index |
the FTSE® 100 Index†, comprising the 100 leading companies traded on the London Stock Exchange. |
| Index Growth |
will be the percentage (if any) by which the Averaged Final Index Level is higher than the Initial Index Level. |
| Initial Index Level |
is scheduled to be the closing level of the Index at the start of the Investment Term on 29 June 2012. |
| Averaged Final Index Level |
is scheduled to be the average of the closing levels of the Index on each of the 13 monthly Index Averaging Dates in the final year of the Investment Term. |
| Index Averaging Dates |
the 13 dates expected to be the 29th calendar day of each month from and including 29 June 2017 to and including 29 June 2018. |
| Investment Term |
the fixed 6 year term starting on and including the Issue Date and ending on and including the Plan Maturity Date. The Plan is subject to potential early kickouts after 2 years, 4 years, which may reduce the Investment Term accordingly. |
You should note that:
In order to smooth out any fluctuations in the level of the Index at the Plan
Maturity Date, the performance of the Index is determined by reference to the
average of the closing levels of the Index on each of the 13 monthly Index
Averaging Dates in the final year of the Investment Term.
This means that if the Index falls significantly just before the Plan Maturity
Date your potential growth payment is likely to be less severely affected. This
will also mean that any rises in the Index during the final year will be
averaged, which is likely to reduce your potential growth payment.
The maximum growth achieved on any kickout may not exceed the levels stated even
if the Index performance is greater than this amount on the relevant date. In
addition, the maximum growth achieved on any kickout may be less than any future
growth that might have been achieved had the Plan continued towards its maximum
Investment Term.
Taxation
The return, whether at Kickout or final maturity, is subject to Income Tax in the year that it is paid, but is free from Capital Gains Tax. This means it will be paid net of basic rate Income Tax at 20%, unless you have selected the Cash ISA option, in which case your return will be paid Gross. If you have not selected the Cash ISA option, you may have to pay more tax if you are a higher rate tax payer, and if you are over the age of 65, any age allowances may also be affected.
Higher rate tax payers will have to pay the extra due on the interest (the difference between tax deducted at 20% and the higher rate of 40% (50% if you earn over £150,000))
Whether you can benefit from gross, net or tax free interest is dependent on your own personal circumstances and tax status and so may be subject to change in the future.
Rates
| Account Name |
FTSE Kickout Bond Issue 10 |
| Interest Rate (AERs) |
If you hold the Bond until the Maturity Date (which is subject to potential early kickout as described below) you will receive your capital back. In addition: If on any kickout date below, the closing level of the FTSE† 100 Index† is greater than or equal to its closing level at the start of the Investment Term, then the Bond will mature and you will receive a return on your Initial Investment calculated (Gross) as follows:
| kickout date |
return |
| 30 June 2014 |
12.85% (6.23% AER) |
| 29 June 2016 |
25.70% (5.88% AER) |
Alternately, if the Plan continues to the end of the maximum 6 year Investment Term then you may also receive a return equal to 100% of any growth in the FTSE® 100 Index† (subject to averaging). |
| Tax Status |
Returns are free from UK Tax for Cash ISAs and/or Cash ISA transfers.
If you invest in the Plan via a Direct Deposit Account any returns will be taxable income in the year that they are paid and will be subject to tax at your marginal rate.
|
| Conditions for Bonus |
Provided that you hold your Plan until maturity, you may also receive an additional Bonus on your Initial Investment following the Plan Maturity Date, based on when the Account Manager receives your cleared funds as set out in the table below.
| Cleared Funds received by |
26 April 2012** |
| Bonus |
0.5% |
**For Investment Type Cash ISA 2012/2013, the Bonus will be 0.50% of your Initial Investment provided that the Account Manager receives
|
| Withdrawal Arrangements |
Early Termination will result in an Early Exit Fee and so you may get back less than you initially invested (except in the event of death where no Early Exit Fee will apply). |
| Access |
You can apply for the Plan through any Skipton Building Society branch or by post. |
Q&A
Availability of the Plan is strictly limited and may close early if oversubscribed. The important dates of the Plan are set out in the table below.
| Plan Open Date |
Last Transfer Date |
Plan Close Date |
Issue Date |
Plan Maturity Date1 |
| 6 June 2012 |
2 June 2012 |
2 June 2012 |
29 June 2012 |
29 June 2018 |
1subject to potential early Kickout on 30 June 2014, or 29 June 2016.
| Investment Type |
Minimum Investment |
Maximum Investment |
Apply By |
Cheque Required |
| Cash ISA 2011/2012 |
£3,000 |
£5,340 |
5 April 2012 |
Yes |
| Cash ISA 2012/2013 |
£3,000 |
£5,640 |
5 April 2012 |
Yes |
| Cash ISA Transfers |
£3,000 |
Full Value |
5 April 2012 |
No |
| Direct Deposits |
£3,000 |
£85,000 |
5 April 2012 |
Yes |
- You must be aged 18 or over and be resident and ordinarily resident in the UK for tax purposes.
- Accounts can be held in joint or sole names, unless the Cash ISA option is selected when it must be held in sole name only.
- You can open an account by cheque only unless you are transferring an existing Cash ISA, in which case you will need to complete a Cash ISA Transfer Request form and a Cash ISA application form.
- To take advantage of the Cash ISA option you must not have invested in a Cash ISA already in the 2011/12 tax year unless you are transferring subscriptions from the current tax year.
- Additional subscriptions are not permitted within this Plan. Please note that if you are eligible and wish to use your full Cash ISA allowance, you must apply for the full £5,340 or you will lose any unused allowance.
Please note: For Cash ISA transfers you should check whether any debit/transfer is subject to transfer or early termination charges. It is your responsibility to make yourself aware of these charges.
If you are in any doubt about the suitability of an investment in the Plan you should obtain advice which can be offered through our wholly owned Subsidiary, Skipton Financial Services Limited (SFS). SFS offer no obligation financial advice on a range of financial products across the market place and advisers are on hand in our branches. Skipton Building Society does not offer investment advice and no investment advice has been given in this promotion.
Please note that the Kickout Bond is intended to be held until the Maturity Date. You should have enough emergency funds elsewhere as the bond is not designed for Early Termination.
Early Termination will result in an Early Exit Fee (except in the event of death) and so you may get back less than you initially invested. The amount you will get back will not be greater than your Initial Investment, regardless of the performance of the Index at the time of Early Termination.
The return from the bond may be less than the return from a standard cash deposit account over the same term.
Returns depend on the performance of the stock market. The level of the FTSE 100 Index may go down as well as up. There can be no assurance as to its future performance.
You should consider whether an investment dependent on the performance of the FTSE 100 Index is suitable for you.
The performance of the bond cannot be directly compared to the performance of a direct investment in the FTSE 100 Index or the shares comprising such Index as there is no direct investment in any Index or the shares comprising any Index. In particular, you will not benefit from any dividends.
The Kickout Bond does not meet ISA stakeholder standards. You should read the Kickout Bond product leaflet in its entirety and the General Terms and Conditions as both will apply to your account.
The effect of inflation will reduce the real value of what you receive at the end of the Investment Term.
Opening a Kickout Bond will not give membership rights in Skipton Building Society.
The bond is intended to be held until maturity, but if you decide to close the investment before that time then an Early Exit Fee will apply, including if you choose to transfer to another provider. This could mean you then get back less than you paid in.
What happens if I die prior to the bond maturity date?
If the account is held in
- Your sole name, your personal representative may elect to terminate your account (and receive the Early Termination Amount) or have the account transferred into the name of your personal representative which means the account will then continue until earlier Kickout date or the maturity date.
- Joint names where one of the account holders dies, the account will be transferred into the survivor’s sole name and will continue on to earlier Kickout or the maturity date.
Please note: If your account is an ISA, it will lose its ISA status in accordance with the ISA regulations.
You will receive the full repayment of your Initial Investment plus any applicable return. You will be contacted prior to the bond maturity date to determine what you wish to do with the proceeds of your account. You should then expect to receive the proceeds of your investment within 15 working days of the bond maturity date.
You will have 14 days from the date of receipt of details of your cancellation rights to change your mind and cancel your investment.
Following the 14 day period any Early Termination will result in an Early Exit Fee and so you may get back less than you initially invested (except in the event of death where no Early Exit Fee will apply). The amount will not be greater than your Initial Investment, regardless of the performance of the Index at the time of Early Termination.
In the case of a complaint about any aspect of the Kickout Bond, please contact us. If your complaint is not dealt with to your satisfaction you can contact the Financial Ombudsman Service. Please see clause 3 of the General Terms and Conditions for more details.
Both RBS and the Deposit Taker are authorised by the FSA to take deposits and is a participant in the FSCS established under the Financial Services and Markets Act 2000. The FSCS can pay compensation to depositors if a bank or building society is unable to meet its financial obligations. In the event that you suffer a loss as a result of RBS or the Deposit Taker failing to meet its financial obligations, it is possible that you have a claim against the Financial Services Compensation Scheme FSCS. 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 eligibledepositors, 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. For further information about the scheme (including the amounts covered and eligibility to claim) please ask the Deposit Taker or refer to the FSCS website www.fscs.org.uk.
Terms and Conditions
Please note:
Before opening an account, please ensure that you read:
These contain important information about the FTSE Kickout Bond Issue 9.
If you are a new customer please bring some form of identification and verification of address as detailed in the Proving Your Identity leaflet. For further assistance, call your local branch or our Principal Office.
How to apply
Ready to open an Account?
To apply, speak to your local Branch on 08457 171777*
- or -
Call Skipton Direct on 0845 603 4735*
Your tax treatment will depend on your individual circumstances and may be subject to change in future.
The FTSE® Kickout Bond is distributed by Skipton Building Society who is also the Deposit Taker. Credit Suisse International is the Account Manager.
†The Plan is not in any way sponsored, endorsed, sold or promoted by FTSE International Limited ("FTSE") or by the London Stock Exchange Plc (the "Exchange") or by the Financial Times Limited ("FT") and neither FTSE nor the Exchange nor FT makes any warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the Index and/or the figure at which the Index stands at any particular time on any particular day or otherwise. The Index is compiled and calculated solely by FTSE. However, neither FTSE nor the Exchange nor FT shall be liable (whether in negligence or otherwise) to any person for any error in the Index and neither FTSE nor the Exchange nor FT shall be under any obligation to advise any person of any error therein. 'FTSE®', 'FT-SE®' and 'Footsie®' are trademarks of the Exchange and the FT and are used by FTSE under licence.