Client Terms and Conditions
How these Terms work
We understand that it can be difficult and sometimes frustrating to wade through lots of legal jargon. We have therefore included this summary to help you understand how these Terms fit together and to highlight which sections are particularly important depending on the specific services you receive from us. It is important that you read, and understand, these Terms in full.
Please be aware that these Terms are intended to apply to customers who have already agreed to receive our advisory services. If you have not agreed to receive our advisory services, then we will not be able to provide you with any other services under these Terms.
These Terms are divided into the following sections:
- Section 1 – General Terms: This section applies to all customers and describes the “core” discretionary investment management service we will provide to you. When you subscribe for this service we will manage your cash and investments and make investment decisions on your behalf. In making investment decisions we will act in accordance with the “Risk Profile” which we will have already agreed with you in relation to your Account.
- Section 2 – Flying Colours ISA: This section applies to those customers who have chosen to hold some or all of their investments through a Flying Colours ISA. If you have subscribed for this service, part or all of your portfolio will be held in a Flying Colours ISA and the additional terms set out in Section 2 will apply in relation to that part of your portfolio held through your Flying Colours ISA.
- Section 3 – Flying Colours SIPP: This section applies to those customers who have chosen to hold some or all of their investments through the Flying Colours SIPP. If you have subscribed for this service, part or all of your portfolio will be held in the SIPP and the additional terms set out in Section 3 will apply to that portion of your portfolio. Please note that the SIPP is a third party product provided by Liberty SIPP Limited (the SIPP Provider). Whilst we are responsible for managing the investments held in your SIPP, the SIPP Provider is responsible for providing, operating and administering the SIPP itself.
- Section 4 – Best Execution: This section applies to all customers and sets out how we achieve the best results for our customers when we transmit investment instructions to Capital International Limited (“CIL”). When CIL receives investment instructions from us it will give effect to those instructions by purchasing or selling the relevant investments. We have selected CIL and put in place arrangements so that we are satisfied that we can comply with our duties to provide you with the best results when we transmit orders to CIL for execution.
- Section 5 – Customer Investments and Risks: This is an important section which should be read carefully by all customers. It summarises some of the key risks you need to consider and be aware of when using our services.
- Section 6 – Conflicts of Interest: This section applies to all customers and explains our policy for managing situations where our own interests or the interests of other customers may conflict with your interests.
- Section 7 – Custody Terms: This section applies to all customers and sets out the terms under which Capital International Limited (CIL) will hold and look after your investments and cash and arrange for the settlement of transactions in relation to your Account. It is important to note that by agreeing to these Terms you are agreeing with Capital International Limited that it shall provide those services directly to you. We do not provide custody or settlement services to our customers.
- Section 8 – Fees and Charges: This section sets out all of the applicable fees and charges that will apply in connection with our services.
- Section 9 – Glossary: This section contains a complete list of defined terms used in these Terms and explains what these mean.
Our Agreement with you
You should be aware that our agreement with you includes the separate Advisory Agreement we have agreed between us in relation to our advisory services, and a number of other documents that can be obtained through our Website, www.flyingcolourswealth.com.
Our regulatory status
We are authorised and regulated by the Financial Conduct Authority in the United Kingdom and therefore owe certain obligations to you, including that we act in your best interests, treat you fairly, and promptly respond to you in the event that you should have any queries or complaints. We take these obligations very seriously and are committed to providing you with the highest standards of care.
You may contact us by email at email@example.com or by phone on 0333 241 9900. Our address is: Flying Colours Finance Limited, 2 Queen’s Court, Lyndhurst Road, Ascot, SL5 9FE.
Please note that Capital International Limited, as provider of custody and settlement services to you, is not regulated by the Financial Conduct Authority in the United Kingdom. Instead, Capital International is regulated in the Isle of Man by the Isle of Man Financial Services Authority. Its contact address is Isle of Man Financial Services Authority, PO Box 58, Finch Hill House, Douglas, Isle of Man IM99 1DT. Further details relating to Capital International Limited are set out in Section 7 of these Terms.
Liberty SIPP Limited (the SIPP Provider) is authorised and regulated by the Financial Conduct Authority in the United Kingdom.
The FCA may be contacted by email at firstname.lastname@example.org or by telephone on 0800 111 6768. Its address is: Financial Conduct Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.
Financial Services Compensation Scheme
We are covered by the Financial Services Compensation Scheme (the FSCS) in the United Kingdom. This means that you may be entitled to compensation (subject to certain limits and restrictions) if we are unable to satisfy claims made against us in the event of our default.
The SIPP Provider is also covered by the Financial Services Compensation Scheme, which means that you may be entitled to compensation from the SIPP Provider (subject to certain limits and restrictions) if it is unable to satisfy claims made against it in the event of its default.
However, as detailed in Section 1 of these Terms, the FSCS does not apply to the services carried on by Capital International Limited for you. Since a similar compensation scheme to the FSCS does not apply in the Isle of Man, no compensation scheme would be available to you in the event that Capital International Limited defaults on its obligations to you in respect of the custody and settlement services it will provide under these Terms.
Client money and the use of omnibus accounts
It is important to note that your money will be held in an omnibus bank account, which means that your money will be pooled with the money of other customers. This means that, if the bank holding your money fails, you will have a claim against a pool of money, rather than against a specific sum in a specified account. As a result, any shortfall in the account will be shared on a pro-rata basis between other customers.
Fees and charges
We believe it is really important to be clear and transparent about all of the fees and charges that will apply in connection with our services. For this reason we have set out all of the applicable fees and charges in Section 8 of these Terms. We will work out for you the specific costs and charges that will apply to your Account and will let you know what they are before we start providing services under these Terms.
Information relating to tax
Please note that certain provisions of these Terms and other documents contained on our Website set out information relating to tax treatment. You should note that tax treatment depends on your individual circumstances and may be subject to change in the future.
Terminating our services
You may terminate our Agreement at any time by writing to us. In such circumstances, we will close your Account as soon as practicable after we receive your notice. When this happens, the cash and investments held in your account will be frozen. You will need to let us know where you would like your investments to be transferred. You will also need to let us know who will be acting as your new ISA manager and SIPP provider (if applicable).
For more information about terminating all or part of our services, please see paragraph 27, Section 1 of these Terms and, in addition, Sections 2 (if you have subscribed for a Flying Colours ISA) and Sections 3 (if you have subscribed for a SIPP). These sections also explain the circumstances under which we may terminate these Terms.
What to do if you have any questions
We really do hope this summary is helpful. If anything is unclear or if you have any questions or queries, please do not hesitate to contact us at email@example.com or by phone on 0333 241 9900.
SECTION 1 – GENERAL TERMS
1. Important information – your agreement with Flying Colours
1.1 These Terms contain important information regarding the services that we provide, so, for your own benefit and protection, please read these Terms carefully before opening an Account, investing with us and/or registering for our advisory services. If there is anything contained in these Terms that you do not understand, please do not hesitate to get in touch for further information by emailing: firstname.lastname@example.org.
1.2 In these Terms, references to “Flying Colours”, “us”, “our” and/or “we” means Flying Colours Finance Limited. The terms “customer”, “client”, “you” and “your” mean any person operating an Account or any person in whose name an Account has been opened to receive services from us.
1.3 In these Terms, a reference to an “Account” means the account that we will open for you which, among other things, records the cash and investments held for you by the Custodian (as described in paragraph 17 below and in Section 7) in respect of which we will provide our discretionary management services.
1.4 These Terms together with:
(A) the separate Advisory Agreement you have entered into in connection with our advisory services (as referred to in paragraph 11.1);
(B) information you provide to us, including that which is used to compile your personal profile and otherwise which you provide to us through our Website: www.flyingcolourswealth.com;
(C) if you are investing in the Flying Colours ISA, the ISA Key Facts Document;
(D) if you are investing in the Flying Colours SIPP, the SIPP Key Facts Document;
(E) all documentation contained on our Website: www.flyingcolourswealth.com; and
(F) all other terms that may be implied or deemed to apply as a matter of law,
constitute the agreement (“Agreement”) between you and us in relation to your Account and the provision of our services.
1.5 We are authorised and regulated by the Financial Conduct Authority (“FCA”), whose address is 25 The North Colonnade, Canary Wharf, London E14 5HS, fca.org.uk. Flying Colours is listed on the FCA Register and our FCA registration number is 672022. Our registered address is 2 Queen’s Court, Lyndhurst Road, Ascot, England, SL5 9FE (Company No 09075635).
1.6 Should you have any complaints in relation to the services provided by either us, the Custodian or the SIPP Provider, then please notify us by email at email@example.com. We will acknowledge your complaint promptly, and arrange for the matter to be investigated in accordance with the rules of the FCA (the “FCA Rules”) and report the results to you. We will also send you a copy of our written complaints policy.
1.7 If your complaint is unresolved or not settled to your satisfaction within 8 weeks from the date you first made the complaint, you may refer it directly to The Financial Ombudsman Service (“FOS”). The address of the FOS is Exchange Tower, London E14 9SR. You can also telephone the FOS at: 0800 023 4 567, or email the FOS at: firstname.lastname@example.org. You can find out further information about the FOS on its Website: www.financial-ombudsman.org.uk.
1.8 Under the FCA Rules, the provision of our services (and, if relevant, the provision of services from Liberty SIPP Limited) may be covered by the Financial Services Compensation Scheme (“FSCS”). You may be entitled to compensation from the FSCS in the event that we cannot satisfy claims made against us in the event of our default. This depends upon the type of business and the circumstances of the claim. The FSCS offers different levels of cover for different types of business. Most types of investment business are covered currently for 100 per cent of the first £50,000. Further information about compensation arrangements is available from the FSCS (fscs.org.uk).
1.9 In the event that an investment is unable to meet its objectives or underperforms, this will not in itself entitle investors to compensation from the FSCS, as investment performance is not guaranteed.
1.10 You should note that the Custodian (as described in paragraph 17 below and in Section 7) is incorporated in the Isle of Man and is licenced by the Isle of Man Financial Services Authority. Consequently, the Custodian’s obligations to you pursuant to the Agreement are not covered by the FSCS. A similar compensation scheme is not available in the Isle of Man. This means that there is no compensation scheme available to you in the event that the Custodian defaults on its obligations to you in respect of the custody services described in paragraph 17 below and in Section 7. Further information regarding the custody services to be provided by the Custodian in respect of your Account are set out in paragraph 17 and Section 7 of these Terms.
2. Our Services
2.1 We will provide to you, or arrange for you to be provided with, the following services when you open an Account with us:
(A) discretionary investment management services which shall be provided to you in accordance with the Risk Profile we have agreed with you to apply to your Account, as described in paragraph 11 below; and
(B) custody, settlement and post-execution services as described in paragraph 17 and Section 7
2.2 You may also select for us to provide to you, or arrange for you to be provided with, the following additional services in relation to your Account:
(A) Individual Savings Account (“ISA”) management services – see Section 2 for the additional terms that will apply if you invest in a Flying Colours Stocks and Shares ISA (“Flying Colours ISA”); and
(B) Self-Invested Personal Pension (“SIPP”) management services – see Section 3 for the additional terms that will apply if you use your Account to invest in a Flying Colours
(paragraph 2.1 and 2.2 together being the “services”).
2.3 Please note that the discretionary management service that we provide under these Terms forms an integral part of our on-going monitoring and advisory service referred to in the Advisory Agreement agreed between us. Therefore, we are not able to provide any discretionary management services on a standalone basis.
2.4 We will provide the services to you in accordance with the Terms in the Agreement, all applicable laws and the rules of the FCA (the “FCA Rules”).
2.5 You should note that Flying Colours is only able to provide you with advice in accordance with your chosen form of advisory service and the Advisory Agreement that applies to that service.
3. When does the Agreement apply?
3.1 The Agreement will become legally binding and we will set up your Account and start providing our advisory and/or investment management services and any additional selected services to you once we have confirmed to you that we have received and processed your Account Opening Form (and any additional documents/information we may require from you) and have obtained satisfactory money laundering verification information as set out at paragraph 5 We are not obliged to accept an Account Opening Form from you or open an Account for you.
3.2 There is no minimum length to the Agreement, but please remember that (if relevant) there may be restrictions on your ability to withdraw your money from an ISA or a Flying Colours SIPP (see Sections 2 and 3 below).
3.3 Information on how we or you can terminate the Agreement and close your Account is set out in paragraph 27 below.
4. Our Client
Who do we provide services to?
4.1 The services that we will provide under the terms of the Agreement are only available to people and entities who are resident in the UK for tax purposes. We may accept non-UK resident persons on a case-by-case basis at our sole discretion.
4.2 We will not provide services to minors. All Accounts must be opened and operated by a person who is at least 18 years of age.
4.3 Additional eligibility criteria may apply if you wish to invest in an ISA or SIPP (see Sections 2 and 3).
How will we classify you?
4.4 We will classify you as a “Retail Client” for the purposes of the FCA Rules. This means that we will provide our services to you on the basis that you are entitled to the protections that must be provided to Retail Clients under the FCA Rules and other relevant legislation. You have the right to request in writing to be classified as a “Professional Client” which attracts a reduced level of regulatory protection; we will consider reasonable requests of this nature, however, we are not obliged to comply with such a request. If we agree with you that we will classify you other than as a Retail Client, we will confirm this to you in writing.
4.5 If you would like further information on the nature of these protections afforded to you under the regulatory regime, please contact our Compliance Officer. Contact details can be found on our website, www.flyingcolourswealth.com.
What if you are a joint account holder?
4.6 Where an Account is held in joint names (for example, if you have opened an Account in the joint names of you and your spouse), you are all jointly and severally liable for your Account and all transactions in respect of your Account shall be carried out on this basis. This means that you are both equally and fully responsible under these Terms and, as such, we may seek redress from either one or both of you.
4.7 For the avoidance of doubt, all payments will be made directly to the joint Account unless otherwise agreed in writing with each joint Account holder. Any payment or accounting which may be made by Flying Colours to any one or more of the joint account holders in respect of your Account will be treated as made to all of you.
Please note that, if you wish to use your Account to invest in an ISA or a SIPP, an Account may only be held by a single individual.
5. Opening an Account
5.1 Before we can provide any services to you, we are required to verify your identity in accordance with UK and Isle of Man anti-money laundering legislation. By completing and submitting to us an Account Opening Form, you acknowledge that:
(A) we may approach credit reference agencies to confirm your identity and (where necessary) the identity of any persons connected to you; and
(B) we can share information about you with the police or any other fraud prevention agency if we reasonably suspect you of fraud or similar financial crimes.
5.2 Once we have accepted your Account Opening Form and received cleared funds from you, we will send you an acknowledgment. Your money will be invested as soon as practicable, however, we may hold your money as cash for a period of time. Please see paragraph 17 below which explains how your money is held.
5.3 You may set up a monthly savings payment into your Account, subject to the investment minimums set out below. If you want to do this, you will need to complete a Standing Order instruction, which can be provided on request. To stop payments, you must notify us and your bank at least 10 days before the next payment is due to be deducted.
5.4 By completing and submitting to us an Account Opening Form, you acknowledge and agree that:
(A) certain obligations are or may be imposed on us under Relevant Law;
(B) pursuant to Relevant Law we may disclose details of your Account (including financial and account information) and, if and to the extent required, the direct or indirect beneficial owner(s) of your Account (if any), and any information and documentation provided by you, to any taxation authority, government agency or other person;
(C) you will promptly provide, on request, and you consent to the use and disclosure of, any information or documentation in relation to yourself and, if and to the extent required, the direct or indirect beneficial owner(s) of your Account (if any), as may be necessary or desirable for us to comply with any reporting or other obligations and/or prevent the withholding of tax or other penalties under Relevant Law;
(D) you will have no claim against us for any losses, liabilities or costs that are suffered by you (including in relation to the direct or indirect beneficial owners of your Account (if any)) as a result of the use or disclosure of such information or documentation by us, or that are attributable to any determinations or actions taken by us for the purposes of complying with Relevant Law;
(E) you will promptly notify us of any change to, update and/or replace without delay, such information and documentation which you have provided to us for the purposes of Relevant Law;
(F) the information and documentation that you agree to provide to us in relation to yourself, includes, but is not limited to, information and/or passport(s), properly executed forms, certificates, or other documentation relating to or establishing your identity, jurisdiction of residence (or formation, if applicable) and income tax status;
(G) to the extent permitted by law, you agree to waive any provision of any data protection, privacy, banking secrecy or other law or regulation of any jurisdiction and/or the terms of any confidentiality agreement, arrangement or understanding that would otherwise prevent our compliance with any Relevant Law, including, but not limited to, your provision of any requested information and/or documentation;
(H) if you provide information and documentation that is in any way misleading, or fail to provide us with the requested information and documentation necessary to satisfy our obligations under Relevant Law, we reserve the right to close your Account; and
(I) you will indemnify us against any financial penalties imposed upon us pursuant to Relevant Law (and any associated interest and penalties) in connection with any act or omission (including without limitation any failure to provide any or all requested information and documentation and/or the provision of inaccurate, incomplete or misleading information and documentation) by you, or any related person.
6. Initial minimum and subsequent investments
6.1 The minimum investment in the first year is £5,000. This may be in the form of a lump sum, regular contributions or any combination of the two
6.2 If you subsequently withdraw money to bring the value of your Account below a minimum investment of £5000, we reserve the right to sell the holdings in your Account and hold your investment as cash. We will notify you beforehand if we propose to exercise this right. Please note that if you are making regular contributions in line with paragraph 6.1 above, the threshold of £5000 shall only apply to you once you have made total payments of £5000.
6.3 If you intend to invest in a SIPP, please refer to Section 3 for the minimum investment and holding thresholds required for a SIPP held within your Account.
7.1 You have a period of 14 days within which to cancel your Account, beginning on the date on which we notify you that your Account is opened. If you decide to cancel, you must notify us promptly within the cancellation period. We will sell any investments that may have been made on your behalf during the cancellation period, but we will not be responsible for any losses that you may incur as a result.
7.2 If relevant to you, please see Section 2 for the cancellation rights which apply to your ISA and Section 3 for the cancellation rights which apply to your Flying Colours
8. How we will contact you
8.1 We may communicate with you at any time using the information you have given us, including, when appropriate, by telephone and (if you have provided your consent on your Account Opening Form) via our Website. It is your responsibility to ensure the contact information we have for you is up-to-date. Typically, we will send all notices, information and other correspondence to the email address set out in your Account Opening Form or such other email address as you may notify us from time to time. We cannot guarantee that electronic communications will be successfully delivered, or that they will be secure and virus free. Save where we have been negligent or where we have breached the FCA Rules, we will not be liable for any loss, damage, expense, harm or inconvenience caused as a result of an email being lost, delayed, intercepted, corrupted or otherwise altered or for failing to be delivered for any reason beyond our reasonable control. However, we will take all reasonable care to ensure the security of the electronic communications we send to you.
8.2 In the event any notice, information or other correspondence is sent to you by post, we will use the postal address set out by you in the Account Opening Form, or such postal address as you may later notify to us, and which, for the avoidance of doubt, will be deemed to be delivered on the second business day after posting.
8.3 We may record and monitor telephone conversations that we have with you in order to be able to check the instructions given to us, for training purposes and quality control, for crime prevention, and to provide a record of our discussions with you. We will store recordings for a period required by law, the FCA Rules or for as long as we consider appropriate (if longer). In the event of a disagreement between you and us, we can give you a copy of a record on request (but we reserve the right to charge you a reasonable fee for this).
8.4 Where Accounts are held in joint names, communications will typically be sent to the first person named on the Account Opening Form.
8.5 All communications in relation to services provided under the Agreement will be in English.
9. How you can give us instructions
9.1 You can give us instructions and notifications in relation to the services by calling us on 01344 266030 and/or by communicating with us via email or by sending us a letter. We may also make available to you a facility through which you may give us instructions and notifications through our Website. Before we act on any instruction, we will take steps to check that the instruction is clear, is given by you or on your behalf, and meets any specific requirements that may apply to the service. In particular, we will ask you to confirm your identity using certain information which will allow us to confirm your identity (“Account Security Information”).
9.2 We will not be obliged to act on any instruction, and in particular we will not act on any instruction where: (a) you do not provide us with your Account Security Information; (b) we reasonably believe the security of your Account Security Information has been compromised; and (c) it is illegal or against any relevant rule or regulation to do so. Where we do act on your instructions we will so do as soon as reasonably practicable once we have received them.
9.3 We may act on any instruction or other notification which we reasonably believe in good faith is from you without carrying out any additional checks or investigations. We may assume (unless we are aware of an obvious error) that the information given by you to us in an instruction is correct.
9.4 Instructions are effective when we receive them. We will generally not acknowledge receipt of instructions other than by acting on them. We will act on your instructions as soon as practicable, therefore it may not be possible to stop or amend an instruction once we have received it.
9.5 Where a delay occurs in processing an instruction due to factors outside of our control (for example, if the relevant dealing venue is closed) we will complete the transaction as soon as possible. We will not be responsible for any such delay.
9.6 For joint Accounts, any of you can give us instructions (including to withdraw investments from your Account or to close any Account), provided that, where we know or reasonably suspect that there may be a dispute or conflict of interest between you, we may seek instructions from each of you before proceeding. You may ask us to remove a person from a joint Account, but we reserve the right to seek instructions from all Account holders before doing so.
10. Online Services
10.1 We may make available a facility through which you can gain access to your Account via our Website. We will take reasonable care to ensure the security of, and prevent unauthorised access to, our Website. However, to help us prevent fraud and protect your Account, you must:
(A) keep your Account Security Information secret at all times and not disclose it to any person (other than any authorised attorney);
(B) take reasonable care to prevent fraudulent or unauthorised use of your Account Security Information by others;
(C) contact us without delay if you believe your Account Security Information has been compromised;
(D) ensure that the device(s) you use to access our online services is/are suitable by carrying our regular virus checks and security updates.
We may suspend the operation of our Website at any time where we consider it necessary to do so. The reasons we may suspend our Website include (but are not limited to) dealing with emergencies; dealing with technical problems; for maintenance and/or for regulatory reasons. We will try to provide you with advance warning when we propose to suspend our Website but this may not always be possible or practicable. We will not be responsible to you if our online system or services are unavailable to you for dealing or information purposes outside of our reasonable control. However, we will take all reasonable care to ensure that our Website is made available to you.
10.2 If you ordinarily use the facility on our Website (which we may make available to you) to gain access to your Account, you should contact us at: email@example.com or 0333 241 9900 if this becomes unavailable to you for any reason.
10.3 If you seek to access your Account while you are outside of the UK, you do so at your own risk.
10.4 The records we maintain of any online instructions, messages or other transactions will be the final evidence of such instructions, messages or transactions unless there is a clear mistake.
11. Discretionary Management Service
11.1 The provision of our services under these Terms is conditional on an applicable Advisory Agreement being in force under which, amongst other things, we have agreed to provide you with on-going monitoring and advisory services.
11.2 Our discretionary management service offers a range of risk profiles, each of which has an investment strategy intended to reflect a desired attitude to risk, investment time horizon, volatility and asset allocation (each being a “Risk Profile”). As part of our advisory service, in accordance with the relevant Advisory Agreement, we will agree with you which Risk Profile should be applied with respect to your Account. Your Account will be managed by us in accordance with the Risk Profile we have agreed with you from time to time.
11.3 In certain circumstances we may apply different Risk Profiles in relation to certain portions of your Account. In such cases we will, for the purposes of applying the Risk Profiles only, treat the relevant portions of your Account as if they were separate Accounts. Accordingly, any reference in these Terms to a “Risk Profile” should be construed as the relevant Risk Profile applying to a given portion of your Account.
11.4 It is important that any information you provide to us (including in your Account Opening Form and via our Website) is true, accurate, complete and not misleading. We shall have no responsibility to you (unless we have been fraudulent, negligent or if we are in wilful default of our obligations to you) if we act on any information that you have provided to us which is found to be incorrect, incomplete or misleading. We are not responsible for any losses you might in incur as a consequence of your failure to provide us with any material information regarding your financial circumstances. You must notify us as soon as possible if the information you have provided to us needs to be updated or is no longer correct, or if your financial circumstances change.
11.5 We will contact you from time to time to check that the information we hold for you in respect of your Account regarding your objectives and financial circumstances continues to be correct. If we are unable to review your information with you, we may have to stop providing discretionary management services to you.
11.6 If, as a result of any new information that you give to us, we think that you should select a new Risk Profile, we will confirm this to you in writing. If you agree this with us, we may have to amend and reissue the Agreement to you.
11.7 We will manage your Account on a fully discretionary basis. This means that, subject to the Risk Profile agreed with you, we will make all the investment decisions in relation to the cash and assets in your Account on your behalf. We will take all reasonable steps to manage your Account with due care and skill and in accordance with your selected Risk Profile. We provide no guarantees that the objectives of your selected Risk Profile will be met. The value of your investments can do down as well as up, and you may lose some or all of your original investment.
11.8 We will manage your Account in accordance with the Risk Profile we have agreed to apply to your Account. To allow us to do this, you grant us full authority, at our sole discretion and without further reference to you, to enter into any of arrangement or transaction on your behalf including investing in any type of investments or other assets. For the avoidance of doubt (subject to any restrictions specified in your Risk Profile), there will be no limit on the amount of your Account that we may invest in any one investment, or on the proportion of your portfolio that any one investment may make up, and there will be no limit or restriction on any particular type of investment, or currency, or on the markets on which transactions are carried out.
11.9 We may make common investment decisions which apply to a number of customer portfolios including your Account.
11.10 Unless otherwise expressly agreed in advance in writing, we may deal on any markets or exchanges and with any counterparties that we believe provide the best outcome reasonably available and, as appropriate, in accordance with our Best Execution Policy (see paragraph 15 below). All transactions will be carried out in accordance with the rules and regulations of the relevant market or exchange, and we may take any steps as may be required or permitted by such rules and regulations and/or by appropriate market practice
11.11 As part of our discretionary management service, we shall exercise any voting rights or corporate actions that may arise in respect of the investments held for your Account. As we shall be responsible for managing your Account, we will not normally forward you copies of annual reports and accounts, information documents, circulars or proxy soliciting material, or meeting and voting information in respect of the investments held for your Account.
11.12 Provided we have not acted negligently or in breach of the FCA Rules, we will not be responsible to you if any investment restrictions or limits specified in your Risk Profile are breached as a result of circumstances beyond our reasonable control.
11.13 Please see the general description of the nature and risks of the investments in which you may invest contained in Section 5. Please note that we are unable to provide any guarantees as to the performance of any particular investments or the Account as a whole. The value of your investment can go down as well as up.
12.1 Income earned on the investments held for your Account which is payable to you will be reinvested in accordance with your Risk Profile when we rebalance your Account (which will occur at least quarterly). Alternatively, you may request in writing that instead of reinvesting income earned on your Account, that we pay this out to you in accordance with such terms as we may agree with you from time to time.
12.2 Investment income cannot be paid out directly from any part of your Account that is allocated to a SIPP. If relevant to you, please refer to Section 3 which sets out further details on how income payments from a SIPP are dealt with.
13.1 Uninvested money (i.e. money not immediately required to settle a purchase or other transaction) held for your Account may attract interest in accordance with the Custodian’s rates published from time to time, details of which are available from Flying Colours on request. If any interest is payable, it will be calculated on a daily basis and will be credited every six months. However, sums of less than £20 will not be credited. The Custodian will pay interest gross, where it is legally permitted to do so. Please see paragraph 6 of Section 7 below for more information.
13.2 Depending on how the Custodian (as described in paragraph 17 below) receives payment from you (i.e. standing order, CHAPS, cheque etc.) interest may start to accrue within 3 business days of receipt of the cash. Interest, if payable, will accrue up to the date your Account is closed.
14.1 Where we make a decision to deal on your behalf in relation to your Account, we will assess the suitability of the transaction for you taking into account your agreed Risk Profile, in accordance with the relevant FCA Rules.
14.2 In accordance with our Advisory Agreement we have prepared a Financial Plan for you which will set out why we consider your Risk Profile to be suitable for you.
15. Best execution
15.1 When we transmit orders to the Custodian (as referred to in paragraph 17 below) we are required under the FCA Rules to achieve the best possible result for you taking into account a number of factors. In order to achieve this, we apply our best execution policy (“Best Execution Policy”), as detailed in Section 4.
16.1 You must provide us with written instructions if you wish to withdraw money from your Account. Subject to the terms of your ISA and/or SIPP (see Sections 2 and 3 respectively), we will realise the investments in your Account to provide you with the cash sum required and will pay the net sale proceeds over into the bank account nominated by you in your Account Opening Form.
16.2 We will pay you the withdrawal proceeds as soon as we can, but you should note that the process of selling the underlying investments may take some time, depending on the settlement dates of those investments.
16.3 If you open a SIPP, you should note that you will generally not be permitted to withdraw your contributions to the SIPP (other than by: (i) transferring them to another SIPP provider, or (ii) as permitted pension benefits where you meet the relevant conditions (including e.g. early withdrawal on the grounds of ill-health)) without incurring a significant tax penalty. Further information is set out in Section 3.
17. Custody and Client Money – Our relationship with Capital International Limited
17.1 We have entered into an Agreement with Capital International Limited (the “Custodian”) for each of our clients (including you) for the provision of safe custody, settlement and post-execution services in respect of your Account. The Custodian’s terms of business are set out in Section 7 to these Terms (the “Custody Terms”). By entering into these Terms, you agree that:
(A) we are authorised to appoint the Custodian and to agree and enter into the Custody Terms on your behalf as your agent;
(B) the Custody Terms form a binding agreement between you and the Custodian. Accordingly, the Custodian (and not Flying Colours) will be responsible for providing you safe custody, settlement and post-execution services in respect of your Account pursuant to the Custody Terms;
(C) we are authorised to give instructions to the Custodian (as provided in these Terms and the Custody Terms) and provide information concerning you to the Custodian, and the Custodian is entitled to rely on such instructions without contacting you;
(D) the Custodian is authorised to hold cash and investments on your behalf and is authorised to transfer cash and/or investments from your Account to meet your settlement and other obligations under these Terms; and
(E) we are authorised as your agent to terminate the appointment of the Custodian and to instruct the Custodian to transfer the assets and cash in your Account to an alternative provider selected by us, provided in doing so we act in your best interests and in accordance with the FCA Rules.
17.2 This arrangement with the Custodian means that you will remain a client of ours, and we will continue to be responsible to you for our own services. However, you will also be a client of the Custodian, and they will be directly responsible to you for safe-custody, settlement and post-execution services. We shall not be responsible to you for the actions or failures of the Custodian.
17.3 Both we and the Custodian are entitled to terminate the Custody Terms, subject to the conditions set out in our agreement with the Custodian. We will notify you of the identity and terms of appointment of any replacement custodian in such circumstances.
17.4 Please be aware that Flying Colours is not authorised to hold your money (referred to as “client money”). This means that we cannot accept a cheque made payable to us or handle cash.
18. Fees and Charges
18.1 You are responsible for paying the fees and charges set out in Section 8 of these Terms. We reserve the right to change these rates from time to time and will notify you of any such changes in writing at least 30 days before they take effect. If you are unhappy with any change to our rates, then you may terminate our Agreement in accordance with paragraph 27.
18.2 You are also responsible for any costs we properly incur in respect of managing the investments in your Account, such as acquisition and disposal costs, commissions, currency conversion costs, fees and charges (including any penalty fees and charges that are incurred as a result of you failing to meet your obligations under the Agreement), management charges, taxes and other fiscal liabilities.
18.3 You will be responsible for VAT or comparable sales taxes (if any) that may be charged in respect of your Account.
18.4 We will typically seek to maintain 2% of your Account in cash so that we may deduct any amounts payable by you to us from your Account. If the available funds are insufficient, we may sell assets held as part of your Account to cover such charges. If there are insufficient investments in your Account to pay the amounts owed to us, you will need to pay these to us by other means.
18.5 Where permitted by the FCA Rules, we may receive payments (such as commissions or other similar benefits) from product providers with whom we have placed business in respect of your Account. In these circumstances we will tell you. Should you require further information regarding our remuneration, commission and fee details, these are available from us on request.
18.6 If we make a payment to you in error, the amount of such over-payment shall be a debt due from you to us and must be repaid to us immediately upon you becoming aware of such over-payment.
18.7 Please note that if our Agreement with you is terminated in relation to your Flying Colours SIPP, you will become directly responsible for the fees and charges of the SIPP Provider until such time as you decide to transfer your SIPP to an alternative provider (if applicable). Please see Section 3 below for more information.
19. Account Reports
19.1 We will provide you with all reports that we are required to provide you with by the applicable regulations, including contract notes and valuation reports for your Account, via email twice a year, in May and November, or via post when requested. These reports will include details of all transactions during the relevant period, details of the contents of your Account, the current market value and the basis of valuation, income and interest and fees charged. You will also be able to access daily Account valuations on our Website. Please note that by agreeing to these Terms you are consenting to the electronic delivery of documents to you, unless you otherwise request for documents to be provided in hard copy via post.
19.2 If your employer requires it, we can provide a letter certifying the provision of discretionary management services. In general, most employers will accept an electronic copy of this letter which we will provide free of charge. If however you require an original signed copy we can post this to you, although we reserve the right to make a reasonable charge for this.
19.3 We will base our valuations on the market information available and other sources that we reasonably believe are reliable. We are not responsible for any inaccuracies in the information we reasonably rely on.
19.4 You may request additional statements from time to time, for which we may charge a reasonable fee. Such statements may not be in the same style as your valuation report.
20. Conflicts of interest
20.1 We or anyone connected with us, may carry out certain transactions for you where we, or another customer of ours, have a duty that may conflict with our duty to you. Where a potential conflict of interest arises, we will take all reasonable steps to protect your interests and ensure fair treatment in accordance with the duties we owe you as our client. We have procedures in place to handle such conflicts of interest and to ensure that we act appropriately. It is our practice to disclose the nature of all conflicts of interest to you and (if appropriate) ask for your permission to continue with the service.
20.2 Our Conflicts of Interest Policy is detailed in Section 5. This sets out the types of actual or potential conflicts of interest which may arise given the nature of our business and provides details of how these are managed. Further details and updates of this policy can be provided on request.
21. Order aggregation
21.1 We may aggregate your transactions with those of other customers without seeking agreement from you beforehand. We will only do so where we believe that this is unlikely to disadvantage your overall position, although it may do so in relation to any specific order.
22.1 We accept responsibility for any direct losses (i.e. those that are foreseeable), damages or costs suffered or incurred by you only to the extent that such loss arises directly from our negligence, wilful default or fraud, and/or our breach of any duties which we owe you under the Financial Services and Markets Act 2000 and/or the FCA Rules. We will not be liable for any other losses, damages or costs suffered or incurred by you.
22.2 We will take reasonable care and exercise reasonable skill in the assessment, selection and appointment of custodians, bankers, counterparties, agents and other third parties. We accept responsibility for any loss, damages or costs incurred by you only where these arise from our, negligence, wilful default or fraud in the assessment, selection or appointment of such persons. We will not be responsible in any other circumstance for the acts or omissions of any such third parties.
22.3 We do not accept responsibility for any loss, damages or costs you may incur as a result of:
(A) any cause beyond our reasonable control; or
(B) the acts or omissions of the Custodian or (if relevant to you) the SIPP Provider (as defined in Section 3); or
(C) us taking any action, or omitting to take any action, to the extent we are required to do so under applicable laws and regulations, the FCA Rules and/or at the direction of a competent regulator such as the FCA.
22.4 No provision of the Agreement will be deemed to restrict, qualify or exclude any duty or liability owed to you under applicable laws or the FCA Rules. For further information about your rights under the applicable laws, you may contact your Citizen’s Advice Bureau.
23.1 We may appoint another person or entity (“delegate”) to perform all or part of the services under the Agreement, provided that we take all reasonable steps to ensure that such delegate is suitably competent and qualified to do so. Where we appoint a delegate:
(A) this will not affect our liability to you for the services we have delegated;
(B) this will be undertaken in accordance with these Terms and the FCA’s Rules; and
(C) we will give you 30 calendar days’ notice if we appoint a delegate to exercise our investment management discretion on your behalf.
24.1 Where appropriate, we may offer to refer you to third parties to provide certain additional services. We will not make any such referral without your agreement however.
24.2 We may pay (or receive from third parties), fees in relation to referrals of business. In making or receiving any such referral and making or receiving such payments, we will at all times act in accordance with all applicable laws and the FCA Rules.
25. Your information
25.1 In order to provide services to you we need to collect, use, share and store information about you, including your financial and personal information. We make every effort to protect the privacy of our customers’ personal information. Other than as set out below, and in paragraph 5 above, your personal information will not be disclosed, transferred or sold to any third party for any purpose. We comply with, and are registered as “data controllers” under, UK data protection laws. You may obtain further information about our registration on the Data Protection Public Register at www.ico.org.uk.
25.2 Without prejudice to the terms of paragraph 5 above, by agreeing to these Terms, you authorise us (and certain third parties, including the Custodian and (if relevant) the SIPP Provider) to use any of your personal information which is relevant to our provision of services to you for all reasonable purposes in relation to your Account. We may retain and continue to process your personal information after the termination of the Agreement or any other agreement between you and us for purposes in connection with the closing of your Account and complying with our regulatory obligations (including those set out under the FCA Rules) and with any obligations we may have pursuant to Relevant Law. In any event we will keep records for a minimum of six years where you have an Account with us.
25.3 Your personal information may be processed by or transferred or disclosed to and/or by third parties where necessary to enable us to provide services to you, including:
(A) to manage and administer your Account in accordance with these Terms;
(B) to arrange for the transfer and disposal of any investments that you may hold for the purposes of opening your Account;
(C) to arrange investments and for internal analysis and research;
(D) to comply and co-operate with regulators, the courts and relevant dealing venues and stock exchanges;
(E) where you have agreed with your employer that we may provide them with details of the trading activity, valuations and balances within your Account;
(F) (where relevant, and subject to your instructions) to transfer your ISA and/or SIPP (as applicable) to an alternative ISA/SIPP provider;
(G) to keep you informed of other services that we offer that may be of interest to you; and
(H) to comply with Relevant Law.
25.4 There may be occasions where we are required to transfer your personal information to a third party who may process your personal information outside of the European Economic area (such as in the United States or India, for example). Such countries do not always have the same personal data protection standards as those in the European Economic area. However, we are required to put in place contracts where your personal data is to be processed outside of the European Economic area to ensure that your personal information is adequately protected.
25.5 You can request copies of your personal information held by us or any service provider we appoint to provide you with the services under the Agreement by notifying us at The Data Protection Officer, Flying Colours Finance Limited, 2 Queen’s Court, Lyndhurst Road, Ascot, SL5 9FE. We reserve the right to charge you a reasonable fee for providing you with this information. You should notify us if any of the information held is incorrect.
25.6 If you would prefer not to receive direct marketing information or to be contacted to provide feedback on our services, please do let us know by contacting us at: firstname.lastname@example.org.
26. Amending these Terms and our Agreement with you
26.1 We may, at any time, upgrade your Account or enhance the services we provide to you if we reasonably consider that this is to your benefit and there is no increased cost to you.
26.2 We may also amend these Terms:
(A) if we are required to do so for reasons of compliance with the FCA Rules, or any other applicable law or regulation;
(B) to reflect changes in the costs and charges that we incur (or reasonably expect to incur) in providing the services to you, including to take account of changes in the rates of inflation, taxes or interest;
(C) to make these terms fairer to you or easier to understand, or to correct mistakes;
(D) to reflect changes in market practice or conditions;
(E) to enable us to make reasonable changes to the way we provide our services as a result of changes in the financial services sector, technology, or available products;
(F) to reflect changes to our arrangements with the Custodian and (if relevant to you) the SIPP Provider.
26.3 If we propose to make a change to these Terms in a way that is not detrimental to you, we can make the change immediately. We will make information about the relevant change available on our Website within 30 days of the change.
26.4 If we propose to make a change to these Terms that may be detrimental to you, we will provide you with at least 30 days’ prior notice (unless we are required to make the change sooner, for example, for legal or regulatory reasons, in which case we will make available to you information about the change as soon as possible). If we make a change that is detrimental to you, you may close your Account with us (without charge) for a period of 90 days from the date of such change becoming effective.
27.1 You may terminate the Agreement at any time and for any reason by providing us with written notice. Subject to the settlement of all outstanding transactions we will close your Account as soon as practicable after receiving your notice to terminate these Terms. Transactions already in progress will be completed in the normal course of business. The charges as outlined in Section 8 will apply until the later of the date of the termination of the Agreement or the settlement of all outstanding transactions in respect of your Account. Unless expressly provided in the Agreement, no fees already paid shall be refunded to you on termination of the Agreement.
27.2 We may terminate the Agreement at any time and for any reason by giving you 30 business days’ notice in writing, subject to the settlement of all outstanding transactions. We may also terminate the Agreement immediately or freeze your Account without giving you advance notice if we reasonably believe that you:
(A) have materially breached any of the terms or have otherwise provided us with false or misleading information;
(B) are using, or allowing another person to use, your Account illegally or for criminal activity;
(C) have behaved in an inappropriate manner (for example, if you abuse any of our staff);
(D) have failed to pay any of the amounts owing to us under our Agreement; or
(E) have become bankrupt, insolvent or you are unable to pay your debts as they fall due.
27.3 We may also terminate our Agreement immediately if:
(A) we reasonably believe that providing you with a service exposes us to action or censure from any law enforcement, government or regulatory body (including, without limitation, the FCA);
(B) either you or the Custodian close your account held with the Custodian.
27.4 Where we terminate the Agreement immediately or freeze your Account in accordance with paragraphs 27.2 or 27.3 above, we will inform you promptly of our decision in writing and set out clearly our reasons for making that decision.
27.5 We reserve the right to terminate the Agreement by providing written notice to you in the event that you cease to receive our advisory services (or otherwise the Advisory Agreement is terminated), as mentioned in paragraph 2.3 of these Terms. In such circumstances, if you have invested in the Flying Colours SIPP you may continue receiving services from the SIPP Provider however, you will become directly responsible for the SIPP Provider’s costs and charges which will be deducted from your portfolio. Alternatively, you may arrange to transfer your SIPP to an alternative provider. Please see Section 3 for more information.
27.6 No additional amount will be payable solely for terminating the Agreement. However, you will be charged a due proportion of our fees to the date of termination, any expenses reasonably incurred by us in giving effect to such termination and any losses incurred in settling or concluding outstanding obligations.
27.7 On termination of the Agreement, we will re-register your assets and transfer your cash as you reasonably request. If you make no reasonable request, we will take steps to re-register your assets into your name and to transfer your cash to you at our discretion.
27.8 If you have opened a Flying Colours SIPP, you should note that you will generally not be permitted to withdraw your contributions to the SIPP or close the SIPP (other than by transferring it to another SIPP provider or as permitted pension benefits) without incurring a significant tax penalty.
27.9 We may, on giving reasonable written notice, transfer your SIPP to an alternative SIPP provider. If relevant to you, please see Section 3 for further information relating to the transfer and termination provisions that apply to your SIPP.
27.10 If you have invested in a Flying Colours ISA, please note that on termination of the Agreement your Flying Colours ISA will either be transferred to your nominated ISA manager or your ISA Account will be closed, which could result in a loss of tax benefits. We will follow the process described in paragraph 8 of Section 2 to transfer your Flying Colours ISA in these circumstances. If relevant to you, please see Section 2 for additional termination provisions in respect of your Flying Colours ISA.
28. What happens if you die?
28.1 These Terms will continue to apply to your Account until the date it is closed. However, please note that this section will not apply in the event that you hold your Account through a SIPP, and you should refer to Section 3. If you hold your Account through an ISA, the tax-free status of your ISA will end on your death.
28.2 Your representatives will need to notify us of your death and send to us a certified copy of your death certificate. Once we receive this notification, in the case of individual account holders, we will suspend your Account and all discretionary management activity will stop at which point your representatives may instruct us how to dispose and distribute your investments. We will continue to deduct our charges, as outlined in paragraph 19.
28.3 Where an Account is held jointly, we will treat the surviving Account holders as being the only persons entitled to the investments and cash in the Account.
29.1 You do not have the right to assign or otherwise transfer to any other party your rights or obligations under the Agreement.
29.2 We may assign our rights and obligations under the Agreement at any time without your consent to:
(A) another entity within our group; or
(B) to a third party outside of our group where we reasonably consider that the transfer will not compromise your rights under the Agreement and the services to be provided to you.
29.3 Unless it is impracticable in the circumstances, we will give you 30 days’ prior notice of any such assignment.
30. Invalid / unenforceable provisions
30.1 We intend to rely on these Terms, which form part of our Agreement with you. Therefore, to protect your own interests, please read these Terms carefully.
30.2 If any provision of the Agreement is or becomes invalid or unenforceable, the provision will be treated as if it were not in the Agreement, and the remaining provisions will still be valid and enforceable.
31. Governing Law
31.1 The Agreement and any dispute or claim arising out of or in connection with it (including non-contractual disputes or claims) will be governed by and construed in accordance with the law of England and Wales.
31.2 The parties irrevocably agree that the courts of England and Wales will have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with the Agreement (including non-contractual disputes or claims).
32. Third Parties
32.1 A person who is not a party to the Agreement cannot enforce or enjoy the benefit of any term of the Agreement under the Contracts (Rights of Third Parties) Act 1999.
SECTION 2: The Flying Colours STOCKS AND SHARES Individual Savings Account (“ISA”)
1. Additional Terms and Conditions
1.1 If you invest via a Flying Colours ISA, this Section 2 contains additional terms and conditions that will apply to your ISA (the “ISA Terms”). This means that our Agreement with you (as outlined in paragraph 1.3 of Section 1 above) will also include these ISA Terms and the Flying Colours’ ISA Application Form or ISA Transfer Form (as applicable).
1.2 If you make subscriptions into your ISA in any tax year subsequent to when you opened your ISA with us, you may be required to complete an additional ISA Application Form (which will also form part of your Agreement with us).
1.3 If there is a conflict between the Terms (including these ISA Terms) and the Individual Savings Account Regulations 1998 (“ISA Regulations”), the ISA Regulations will prevail. If there is a conflict between Section 1 of these Terms and these ISA Terms, these ISA Terms will prevail in respect of your Flying Colours ISA.
1.4 We are approved by HM Revenue & Customs to act as a manager of ISAs.
1.5 In providing the ISA, as well as abiding by our general powers to delegate (please see paragraph 23 of Section 1 above), we will satisfy ourselves that any person to whom we delegate any of our functions and responsibilities under the terms agreed with you is competent to carry out those functions and responsibilities.
2.1 You are eligible to open an ISA if you are: (a) aged 18 or over; and (b) resident in the UK. You may also be eligible to open an ISA if you are a Crown employee working outside of the UK and are being paid out of UK public revenue (or you are married to, or in a civil partnership with, such a person). We reserve the right to ask you to provide proof of your eligibility to invest in an ISA before we accept your application. We may also check the electoral roll.
2.2 Investors can split the amount paid in each tax year into a Cash ISA and a Stocks and Shares ISA as they choose, up to the overall allowance for the tax year. The Flying Colours ISA is a Stocks and Shares ISA.
2.3 You cannot: (a) open an ISA jointly with anyone else; or (b) subscribe for more than one Stocks and Shares ISA in each tax year.
2.4 You must write to us immediately if you are no longer eligible for an ISA.
2.5 If you do not comply with the Agreement, we may have to close or void your Flying Colours ISA. If we have to do this, we will contact you.
2.6 We will also notify you if, due to any failure to satisfy the provisions of the ISA Regulations, your Flying Colours ISA has, or will, become void.
3. Subscribing for a Flying Colours ISA
3.1 Your Flying Colours ISA will be opened once we have accepted your Application Form (see paragraph 5 of Section 1 above) and received your first ISA contribution in cleared funds.
3.2 Subject to paragraph 4 of these ISA Terms, in any tax year investments by you in your ISA must not exceed the maximum subscription limit permitted by the ISA Regulations for the tax year. Please contact us if you do not know what the limits are.
3.3 You can also set your own limit on the contributions that you wish to make to your ISA in any tax year. You will need to contact us if you want to do this.
3.4 We can accept investments into your Flying Colours ISA by cheque, bank transfer or transfer of cash from an existing portfolio held with us. If you wish to apply for an ISA for the next tax year, we may allow you to make an advance application and payment. In this case, the Custodian will hold your investment (in accordance with the FCA’s client money rules) until the first working day of the next tax year, when we will then open your Flying Colours ISA and invest your money in accordance with our Agreement with you. No interest will be paid.
3.5 Subject to HM Revenue & Customs’ (“HMRC”) ISA transfer rules and the ISA Regulations, you can also transfer to us an existing Cash ISA or Stocks and Shares ISA that you hold with another ISA plan manager. If you want to transfer to us an ISA opened in the current tax year, it must be transferred in full and your allowance for the tax year will continue to apply to your Flying Colours ISA. ISAs from previous tax years may be transferred to us in part or in full without affecting your current tax year’s allowance.
3.6 If you wish to transfer your existing ISAs to us from another ISA plan manager, you will need to complete an ISA Transfer Form and return it to us at our office address: Flying Colours Finance Limited, 2 Queen’s Court, Lyndhurst Road, Ascot, SL5 9FE. Once we have received your completed ISA Transfer Form, we will contact your existing ISA plan manager and arrange for your ISA investments to be transferred.
4. Additional permitted cash subscriptions following the death of a spouse
4.1 Please note that a one-off additional permitted subscription allowance (an “Additional Allowance”) is available to the surviving spouse of an ISA investor, where that ISA investor has died on or after 3 December 2014. Where certain conditions are met, the Additional Allowance allows the surviving spouse to make an additional subscription into their ISA, in excess of their annual allowance, up to the value of the deceased ISA investor’s ISA(s) at the date of death. Please contact for more information on the Additional Allowance.
4.2 Where you are entitled to an Additional Allowance, we permit you to invest your Additional Allowance in a Flying Colours ISA. You can use your Additional Allowance to make a single subscription or a series of subscriptions, provided you do so within the specified time limits (set out in paragraph 4.5 below) and provided such subscriptions together do not exceed the value of the deceased’s ISAs.
4.3 You can only invest your Additional Allowance with one provider. Once invested, such subscriptions will be treated as subscriptions relating to the previous tax year.
4.4 You can use a Flying Colours ISA solely to receive additional permitted subscriptions (which will not cause you to breach the “one Stocks and Shares ISA per tax year” requirement referred to in paragraph 2.3 above) or you can use your Additional Allowance to make additional permitted subscriptions to an existing Flying Colours ISA. However, you will be required to provide us with certain prescribed declarations regarding your status as the deceased’s spouse before we can accept such add additional subscriptions.
4.5 Your Additional Allowance must be invested within three years of the date of death of your spouse or (if later) 180 days after the administration of your spouse’s estate.
4.6 For the above purposes “spouse” means a spouse or civil partner that, in each case, was living together with the deceased ISA holder at the date of their death.
5. Investing in a Flying Colours ISA
5.1 Your ISA will be invested on a discretionary basis in accordance with your Risk Profile, subject always to the requirements of HMRC and the ISA Regulations. In particular, we will only invest Account contributions allocated to your ISA in investments permitted by the ISA Regulations.
5.2 For each new tax year, all contributions to your Account will be allocated first to your Flying Colours ISA until the maximum subscription is reached for that year, or until your own pre-set limit is reached. Once the maximum subscription is reached, future contributions are allocated to the non-ISA remainder of your Account.
5.3 As your ISA manager, we will comply with the duties and exercise the powers given to us by the ISA Regulations, which include claims for repayment of (or credit against) tax in respect of your Flying Colours ISA. We may apply any cash and sell investments forming part of your Account for payment of charges and taxes that you are bound to pay to us pursuant to the Agreement or under the ISA Regulations.
5.4 By entering into the Agreement, you authorise us to provide information to HMRC in respect of your ISA as it may request under applicable laws and regulations.
6.1 The investments made for you in your Flying Colours ISA will be registered in the name of, or otherwise held to the order of, the Custodian as our nominee. This includes any share certificates or other documents of title to your Flying Colours ISA investments.
6.2 You will be, and must remain, the beneficial owner of any of your investments that are held by the Custodian in respect of your Flying Colours ISA. Your investments in your Flying Colours ISA must not be used as security for a loan or any other similar arrangement.
6.3 As we shall be responsible for managing your Account, we will not normally forward you copies of annual reports and accounts, information documents or meeting and voting information in respect of the assets allocated to your Flying Colours ISA. However, on the payment of an administration fee (details of which are available from us on request), you may request in writing to:
(A) receive the annual reports and accounts of all funds, investment trusts or companies (or any other concern in respect of shares, securities or units) published while held for your ISA;
(B) attend and vote at company meetings;
(C) exercise voting rights in respect of shares or units by way of proxy of the Custodian; and
(D) receive other information supplied to shareholders, security holders or unit holders.
6.4 In accordance with the ISA Regulations, interest may be paid on cash held in, subject to any applicable exemptions from taxes or tax charges available to your Flying Colours ISA from time to time. Any such interest shall be re-invested. Please see paragraph 13 of Section 1 for more information.
7.1 In addition to the reports outlined in paragraph 19 of Section 1 above, you will be sent a valuation of your ISA investments at least every six months or otherwise in accordance with the ISA Regulations.
8. Transferring your Flying Colours ISA
8.1 You can ask us to transfer all of your current tax year’s ISA, and all or part of your previous tax years’ ISAs, held with us to another ISA plan manager, and ask us to complete the transfer by a certain date. You must complete our ISA Transfer Form when requesting. Transfers out may be subject to fees (see Section 8).
8.2 You will need to contact your new ISA plan manager and make arrangements, for them to receive your transfers, in accordance with their requirements. Your new ISA plan manager will need to contact us to arrange for the transfer. We always endeavour to complete your transfer within the time you have requested, but do require a reasonable period to complete your request (up to 30 days, as permitted by the ISA Regulations). Transfers will take place in the form of cash unless otherwise agreed with you.
9. Withdrawals from your ISA
9.1 You can instruct us (in writing) at any time to withdraw, and pay to you, all or part of the cash proceeds of sale of your investments in your Flying Colours ISA. We always endeavour to process your withdrawal within the time you have requested, but do require a reasonable period to complete your request (up to 30 days, as permitted by the ISA Regulations). Any amount due may be held outside of your Flying Colours ISA pending payment.
9.2 We may deduct from any withdrawal proceeds such amounts as we reasonably estimate to be required to meet any tax liability for which we must account to HMRC in respect of your Flying Colours ISA.
10. Closing your Flying Colours ISA
10.1 If we close your Account in accordance with paragraph 27 of Section 1 above, we will also close your Flying Colours ISA. We will give you at least 30 days’ notice of our intention to close your Flying Colours ISA.
10.2 We may also terminate your Flying Colours ISA immediately in the event of your bankruptcy or fraud, or if your Flying Colours ISA is voided in accordance with the ISA Regulations (see above).
10.3 You may close your Flying Colours ISA by giving us written notice that you wish to do so. In such circumstances, any further contributions you make into your Account will not be held in an ISA.
10.4 Notwithstanding your request to close your Flying Colours ISA, we may leave it open (at our sole discretion) until the date the final claim to tax has been paid by HMRC.
SECTION 3: ADDITIONAL TERMS FOR CUSTOMERS WITH A SELF-INVESTED PERSONAL PENSION SCHEME
1. Additional Terms and Conditions
1.1 If you invest in a Flying Colours SIPP via your Account, this Section 3 contains additional terms and conditions that will apply to your Flying Colours SIPP (the “SIPP Terms”). This means that our Agreement with you (as outlined in paragraph 1.3 of Section 1 above) will also include these SIPP Terms and the SIPP Application Form (as applicable). If any of the terms in Section 1 conflict with these SIPP Terms, these SIPP Terms take priority.
1.2 By completing and submitting to us the SIPP Application Form, you acknowledge and agree that:
(A) your Flying Colours SIPP shall be provided under the Liberty SIPP (the “Scheme”), a registered pension scheme for the purposes of Part IV of the Finance Act 2004 (the “Act”). The Scheme is governed by a trust deed and rules, as amended from time to time by subsequent executed deeds (the “Trust Deed” and the “Rules” respectively);
(B) you shall be bound by the Trust Deed and the Rules in relation to your Flying Colours SIPP (a copy of the Trust Deed and Rules is available on the Website). If any of these SIPP Terms conflict with the Trust Deed or the Rules, the Trust Deed or the Rules (as applicable) shall take priority in respect of the operation of your Flying Colours SIPP;
(C) the operation of your Flying Colours SIPP shall be subject to the Act and/or any other applicable subordinate legislation and any other current or future legislation which affects registered pension schemes (the “Pension Regulations”). Further, these SIPP Terms reflect the current Pension Regulations (and the SIPP Provider’s understanding of the current Pension Regulations) and HMRC practice and are therefore subject to change. These SIPP Terms should be read in conjunction with the SIPP Key Facts Document (a copy of which is also on the Website) applicable to the Flying Colours SIPP, which may be updated from time to time in line with any changes to the Regulations and/or HMRC practice;
(D) Liberty SIPP Limited (“the SIPP Provider”) is the establisher, operator and administrator of the Scheme, including your Flying Colours SIPP. The SIPP Provider is authorised and regulated by the Financial Conduct Authority. The SIPP Provider’s registered address is The Exchange, Bank Street, Bury, BL9 0DN. These SIPP Terms and the SIPP Application Form are a binding agreement between you and the SIPP Provider in respect of your Flying Colours SIPP. Flying Colours shall not be responsible to you for the actions and failures of the SIPP Provider;
(E) Liberty Trustees Limited (the “Trustee”) is the trustee of the Scheme, including your Flying Colours SIPP;
(F) Flying Colours is authorised to enter into these SIPP Terms on your behalf as your agent, to give the SIPP Provider instructions in respect of the management of your Flying Colours SIPP and provide information concerning you to the SIPP Provider, and the SIPP Provider is entitled to rely on such instructions and information without contacting you.
1.3 The Trust Deed consists of the trust provisions, the governing Rules and three Schedules. Schedule Three contains provisions relating to the “Liberty Option SIPP” and it is this Schedule which is applicable to your Account with Flying Colours Limited. As noted above, you can review the Trust Deed (including Schedule 3) on our Website.
1.4 Your SIPP Arrangement is made up of 1,000 separate segments (each a “Segment”), which will be held (as provided for the Trust Deed and Rules) within one or more “Arrangement(s)” for the purpose of the Act. The SIPP Provider reserves the right to vary the structure of the Scheme and the manner in which your Segments are held under the Scheme from time to time. Any such amendment, variation or modification of the structure of the Scheme will not amount to an amendment of these SIPP Terms, and as such we will not be required to provide you with notice of any such change under paragraph 26 of Section 1.
1.5 If you transfer-in benefits to the Scheme that have already been made available to pay income withdrawal benefits, then the funds in your Flying Colours SIPP representing those rights will be held in separate Arrangements to any other funds you hold under the Scheme. Such transfers-in shall only be permitted to the extent that they do not prejudice the Scheme’s status as a registered pension scheme. Each Arrangement is formed by these SIPP Terms. Your membership of the Scheme is based on the declarations you made to us and the SIPP Provider, the information you disclosed and the options you have selected on your SIPP Application Form.
1.6 Please note that other than relevant advisory services to be provided to you as mentioned in Section 1, paragraph 11 of these Terms, neither Flying Colours, the SIPP Provider nor the Trustee will provide you with investment or tax advice under these SIPP Terms, nor is anything in these SIPP Terms to be construed as financial advice, pensions advice or tax advice to you. Flying Colours, the SIPP Provider and the Trustee cannot advise you as to the appropriateness (including any tax consequences) of any contributions made to your SIPP and shall have no liability accordingly. You should consult a suitably qualified financial adviser if you have any questions regarding making contributions to, or taking benefits from your SIPP.
2.1 You are eligible to open and contribute to a SIPP if you are: (a) aged 18 or over; and (b) a “Relevant UK Individual”, meaning that you:
(A) have relevant UK earnings chargeable to income tax in the current tax year; or
(B) either: (i) are resident in the UK at some time during the current tax year; or (ii) were resident in the UK at some time during the 5 tax years immediately before the current tax year and also resident in the UK at the time of joining the Scheme; or
(C) have, or are the spouse of a person who has, for the current tax year general earnings from overseas Crown employment subject to UK tax.
2.2 You understand that, if you are no longer a Relevant UK Individual, you must stop making contributions to your Flying Colours SIPP. In these circumstances, you must notify us as soon as possible (and in any event, within 30 days), so that we can pass this information on to the SIPP Provider.
2.3 You understand that you will only be eligible to open, or continue to contribute to, a Flying Colours SIPP through your Account if the investment you have made in your Flying Colours SIPP from the first 12 months from opening your Flying Colours SIPP is equal to or greater than £10,000.
3. Your Right to Cancel the SIPP
3.1 You have the right to cancel your SIPP within 30 days from the date Liberty SIPP receive the application and a notice will be sent to you explaining this. If you wish to cancel your Liberty SIPP you will need to provide the administrators (contact details below) with written confirmation and send this to them before the 30 days has expired.
3.2 If you cancel your SIPP any contributions made will be returned and if there are any funds that have been transferred into the SIPP during this period we will attempt to return these to the provider you have transferred from. We cannot guarantee this will be possible, as not all providers will allow funds to be returned. If the original provider will not accept the funds back we will allow you to transfer out of the Liberty SIPP free of charge if you have cancelled the membership within the 30 days.
3.3 If you have invested any funds within the 30 day cancellation period you may get back less than you originally invested. Liberty SIPP cannot be held responsible for any loss.
3.4 Liberty SIPP will refund any Financial Adviser charges that have been paid from the SIPP. This means your Financial Adviser will not be paid for any advice they have provided. You may still be liable to meet these costs directly with your Financial Adviser.
3.5 Each time you apply to transfer an existing pension into the Liberty SIPP you have a right to cancel the transfer. Each transfer can be cancelled separately up to 30 days after Liberty SIPP have received a signed transfer discharge form or signed letter of authority, and a notice of this right will be sent to you separately. Liberty SIPP will request transfers immediately on your instructions. If funds are received into the SIPP and you then choose to cancel the transfer before the 30 days have expired we will attempt to return the funds. We cannot guarantee that the transferring scheme will be able to accept the funds back. If this is the case, we will allow you to transfer out to an alternative scheme, free of charge.
3.6 A 30 day cancellation period also applies the first time you choose to take retirement benefits and a notice will be sent to you in this event which will allow you 30 days from the date we make any payment to you to change your mind. If you decide to cancel your decision to take benefits any lump sums or drawdown income will need to be returned to the SIPP.
4. Contributions to your Flying Colours SIPP
4.2 You (or where relevant, your employer) can make regular or ad hoc contributions to your Flying Colours SIPP, subject to: (a) the methods set out in paragraph 5 of Section 1; (b) the applicable thresholds set out in paragraph 6 of Section 1; and (c) the conditions set out below. Further information regarding contributions is set out in the SIPP Key Facts Document.
4.3 All investments in your Account that are to be allocated to your Flying Colours SIPP as contributions must be supported by the appropriate SIPP Application Form and/or any other documentation required by the Scheme. Proposed contributions received by the Scheme without the appropriate documentation will not be allocated to your Flying Colours SIPP (and will therefore be held in the part of your Account not allocated to your Flying Colours SIPP) unless such documentation is supplied within thirty (30) days of the proposed contribution being received. The Scheme reserves the right to reasonably refuse any proposed contribution.
4.4 Once a contribution has been accepted by the Scheme, it cannot normally be refunded or withdrawn. HMRC and the Pension Regulations only permit refunds or withdrawals (other than as pension benefits) in very limited circumstances.
4.5 Please note, no payment can be accepted as a contribution unless it is paid directly by you or (where we have agreed Employer Contributions with you – see below) your employer to the Scheme and not, for example, through a third party intermediary (such as a financial adviser, for example).
4.6 All contributions paid and transfers of other invested pension entitlements into the Scheme by you or on your behalf shall be apportioned equally between your unvested Segments. The Scheme reserves the discretion to alter the apportionment for the purposes of rounding-up to the nearest one pound (Sterling).
4.7 Subject to the Rules, at such times as we allow, you may: (a) agree with us new levels of contributions; and (b) pay additional regular or single contributions, subject to the minimum investment thresholds outlined at paragraph 6 in Section 1 of the Terms.
4.8 Pension input period
Your pension input period is a period of time, in terms of the Pension Regulations, that is used to measure the amount of contributions paid by you into your pension arrangements. In respect of your Flying Colours SIPP, the first pension input period will end on the following 5th April following the first contribution.
4.9 All Pension Input Periods will run from the 6th April (or, if later, from the date of your first contribution) to the following 5th April and cannot be changed.
4.10 Member Contributions
The Scheme is able to accept cash contributions from you (“Member Contributions”). Member Contributions may be made:
(A) (in respect of an initial contribution) with the SIPP Application Form; or
(B) (in respect of any subsequent such Member Contribution) with a completed Additional Contribution form (copies of which are available from us); and/or
(C) on a regular basis (see the SIPP Application Form for further details); and/or
(D) on such other basis as we and the SIPP Provider may agree with you from time to time.
4.11 Where Member Contributions do not qualify for tax relief (see 4.14 below) such contributions may only be made as a one-off payment in any amount.
4.12 Member Contributions qualifying for tax relief
Subject to limitations, Member Contributions will qualify for tax relief provided that:
(A) the Member is under the age of 75 at the time the contribution is accepted; and
(B) the Member is a Relevant UK Individual; and
(C) the contributions do not exceed the Annual Allowance.
4.13 “Annual Allowance” means the maximum amount of pension savings that can be made in any one tax year. For 2016/17 the annual allowance is £40,000. Please note, you may have a reduced Annual Allowance if you have accessed your pension flexibly therefore triggering the money purchase annual allowance (“MPAA”). If you have triggered the MPAA with another pension scheme, you must contact us as the SIPP Provider will need to be made aware of this. If you trigger the MPAA whilst invested in the Flying Colours SIPP, you will have 30 days under the Pension Regulations to notify any other schemes that you are member of. From 6 April 2016, for those with income (including investment income) in any tax year of more than £110,000 the annual allowance is set to be tapered down from £40,000 to £10,000 as the sum of an individual’s income (including investment income) and pension savings in any tax year rises from £150,000 to £210,000 (with every extra £2 of income above £150,000 reducing the annual allowance by £1). For more details, please see the SIPP Key Facts Document.
4.14 Subject to certain exceptions (as set out in the Pension Regulations), if in any pension input period your total gross contributions to all registered pension schemes exceeds the Annual Allowance (the Annual Allowance for this purpose being the Annual Allowance for the tax year in which the relevant pension input period ends), the amount of the excess contributions will be subject to an annual allowance tax charge. The levying of any such tax charge is a matter between you and HMRC unless the charge is greater than £2,000 in which case you may request that this is paid from your Flying Colours SIPP.
4.15 Your Member Contributions that qualify for tax relief are paid net of basic rate tax. The SIPP Provider will claim tax relief monthly, in arrears, at basic rate from HMRC on such Member Contributions. For example, if you make a net Member Contribution of £80.00, the SIPP Provider will claim the basic rate of tax (20%), £20.00 from HMRC, resulting in a gross Member Contribution to your Flying Colours SIPP of £100.00.
4.16 Tax relief is not available for investment by the SIPP Provider until it is received from HMRC, which can typically take six (6) to ten (10) weeks depending on the timing of your contribution. A cash amount equal to the tax relief claimed will be credited to your Flying Colours SIPP.
4.17 You will be responsible for reclaiming any higher rate tax relief (i.e. over the basic rate) from HMRC, which may be reclaimed by you through your local HMRC tax office. Any higher rate tax relief claimed by you will not be credited to your Flying Colours SIPP unless you invest it as a contribution.
4.18 Recycling of Pension Commencement Lump Sums
For the purpose of the Pension Regulations, tax-free cash “recycling” occurs when you use your tax-free cash (known as Pension Commencement Lump Sum) to significantly increase pension contributions and gain additional tax relief. The Pension Regulations, and therefore the SIPP Provider, will not allow the “recycling” of Pension Commencement Lump Sums in respect of the Scheme. If you do significantly increase your pension contributions (including via your Flying Colours SIPP) to such an extent that HMRC determines that you are recycling tax-free cash, you will be responsible for any tax charge imposed by HMRC as a result.
4.19 Employer Contributions
Your employer can make contributions to your Flying Colours SIPP (“Employer Contributions”), and you should consult with your employer to determine whether it is prepared to make such Employer Contributions. Any Employer Contributions to your Flying Colours SIPP will be subject to the Annual Allowance limits set out in paragraph 4.15 above.
4.20 Where your employer is paying Employer Contributions to your Flying Colours SIPP, it will need to provide the Scheme with a schedule of Employer Contributions due. This enables monitoring of safe receipt, in accordance with the Pension Regulations. Your employer will also need to include in this schedule details of all your Member Contributions that are due to be deducted via payroll.
4.21 Employer Contributions must be paid gross. You are not entitled to receive tax relief on Employer Contributions. Your employer may, however, be able to claim tax relief directly from HMRC against its own liability to tax (Flying Colours and the SIPP Provider are not responsible for making such claims).
4.22 The SIPP Provider will check the credit status of any employer contributing to your Flying Colours SIPP to ensure that the contributions are coming from a creditable source.
4.23 Contributions and Lifetime Allowance
“Lifetime Allowance” is a limit on the amount of tax privileged pension benefit that can be built up in registered pension schemes without triggering an extra tax charge. If, at the time you (or your employer) make a contribution to your SIPP, you have already applied to HMRC for “protection” (including Enhanced Protection or Fixed Protection) against the successive reductions over recent tax years in the standard Lifetime Allowance (currently £1 million), such a contribution:
(A) could invalidate your protection from these reductions in the Lifetime Allowance depending on the kind of protection held; and
(B) may result in a Lifetime Allowance charge being levied by HMRC when the Arrangements or part thereof vest.
4.24 If you have any concerns as to whether a contribution may result in a Lifetime Allowance protection being lost or a charge being levied, you should consult with us. The SIPP Provider and Flying Colours will not be liable for any loss to you in the event of a Lifetime Allowance protection being lost, or a charge being levied on you by HMRC.
5. Exercise of Investment Options
5.1 Your Flying Colours SIPP will be invested by us, on your behalf, on a discretionary basis in accordance with your Risk Profile (see paragraph 11 of Section 1), subject always to the requirements of the Rules, HMRC policy and the Pensions Regulations.
5.2 You should note that certain investments, if invested in through a Flying Colours SIPP, may be subject to a significant tax charge pursuant to the Pensions Regulations. You should be aware that the SIPP Provider reserves the right to refuse to act on an investment instruction where to do so would cause the Scheme, or could reasonably cause the Scheme to incur a tax charge or other similar financial penalty. Further information is set out in the Rules.
5.3 Neither the SIPP Provider nor the Trustees accept any liability for any decisions relating to the purchase, retention and sale of the investments within your Flying Colours SIPP. In no circumstances shall Flying Colours, the SIPP Provider or the Trustee be obliged to monitor or account for the investment performance of your Flying Colours SIPP.
6.1 All cash and assets allocated to your Flying Colours SIPP are held under trust in accordance with the Rules. Non-cash investments made for you in your Flying Colours SIPP will be registered in the name of, or otherwise held to the order of, the Trustee.
6.2 As we shall be responsible for managing your Account, we will not normally forward you copies of annual reports and accounts, information documents or meeting and voting information in respect of the assets allocated to your Flying Colours SIPP.
6.3 In respect of cash allocated to your Flying Colours SIPP, the Trustee has opened one or more bank accounts with Metro Bank, which is regulated by the Financial Conduct Authority to accept deposits. These bank accounts provide banking facilities in accordance with Metro Bank’s normal terms for accounts maintained on behalf of the Scheme. The terms are available to you on request. For any accounts held with Metro Bank, the Trustee will be the sole signatory. All cash allocated to your Flying Colours SIPP that is not invested will be held in these bank accounts and will be clearly designated as relating to your Arrangements.
7. Retirement & Death benefits
7.1 You are able to access an income from your Flying Colours SIPP once reaching age 55 or earlier on the grounds of ill-health. Subject to the Rules, the Trustee may commute on grounds of serious ill-health the entirety of your benefits in the Scheme before they come into payment provided that the Scheme administrator has received written evidence from a registered medical practitioner confirming that you are expected to live for less than a year and you have not used up all of your Lifetime Allowance at the time the payment is made. Income can be taken via the following routes: (a) Flexi Access Drawdown, (b) the purchase of an annuity, (c) or a combination of both. Please note that you will not be able to take any Uncrystallised Funds Pension Lump Sums from your Flying Colours SIPP.
7.2 If you were in capped drawdown prior to April 2015 you are able to continue to take income using this method should you so wish. Please ensure you inform the SIPP Provider of this requirement when you establish your Flying Colours SIPP.
7.3 With Flexi Access Drawdown, as long as you have sufficient Lifetime Allowance available, you are able to take 25% of your fund tax free as a pension commencement lump sum. You can then drawdown from the rest of your fund as and when required, paying your marginal rate of tax. The minimum amount you may drawdown at a time is £1,000.
7.4 You should ensure that you take advice from a suitably qualified financial adviser when entering drawdown to ensure that you do not pay excess tax on any income using this option. Should you inform us that you wish to exercise the ability to purchase an annuity, you must inform us of your choice of provider so that we can instruct the SIPP Provider to proceed with the transaction
7.5 In the event of your death prior to your 75th birthday, your pension can be passed onto your beneficiaries completely free from tax as a lump sum or a beneficiary’s drawdown pension.
7.6 Any funds that haven’t been used for an existing drawdown will be tested against the Lifetime Allowance and any funds found to be over the Lifetime Allowance will be taxed at 55% before being paid to any beneficiary.
7.7 If you die after your 75th birthday, for the tax year 2016/17, you may pass your pension on to your beneficiaries as a lump sum, where these beneficiaries will pay 45% tax.
7.8 After April 2016, your pension can be passed to beneficiaries as a lump sum and they will pay their marginal rate of income tax. Alternatively, beneficiaries can opt to take a Beneficiaries Drawdown where they will pay their marginal rate of tax on each income payment.
Further information regarding how you can take your pension benefits is set out in the SIPP Key Facts Document and in the Rules.
8. Indemnity and Liability
8.1 Where you carry out an act in respect of your Arrangements that is prohibited by law or regulation or which would amount to an unauthorised payment under the Act, then Flying Colours and/or the SIPP Provider may take such actions as may be necessary to correct such act. In this regard, you shall fully indemnify Flying Colours, the Trustee and the SIPP Provider in respect of all costs, claims, demands and expenses incurred.
8.2 Neither Flying Colours, the Trustee nor the SIPP Provider shall incur any liability to you arising out of:
(A) a failure to perform, or any delay in performing their respective obligations under these SIPP Terms if the failure or delay results from an act of God, war, riot, natural disaster, ﬁre or any other cause beyond our reasonable control;
(B) (in the case of the Trustee and the SIPP Provider) loss occasioned by a professional adviser (including Flying Colours);
(C) any unauthorised payment (as deﬁned in the Act) or tax charge imposed in respect of the Scheme; or
(D) any fall in the value of your Flying Colours SIPP.
9. Bank Account
9.1 The Trustees have opened one or more bank accounts with Metro Bank who are regulated by the Financial Conduct Authority to accept deposits, in respect of your SIPP Membership. These bank accounts provide banking facilities in accordance with The Metro Bank’s normal terms for accounts maintained on behalf of the Scheme. The terms are available to you on request. Liberty Trustees will be the sole signatory of the Metro Bank accounts.
9.2 All monies in your Member’s Fund that are not invested will be held in these bank accounts and will be clearly designated as relating to your Arrangements.
9.3 As part of the agreement between Liberty SIPP Ltd and Metro Bank, any cash deposits receive interest. Metro Bank pays an additional rate above this to Liberty SIPP Ltd to cover any transactional costs associated with the management of your account.
For full details of the current Metro Bank interest rates, please visit https://www.libertypensions.com/advisers/charges.
10.1 If we can close your Account in accordance with paragraph 29 of Section 1 above, we will cease to provide our discretionary management services in relation to your Flying Colours SIPP. We will give you at least 30 days’ notice of our intention to cease managing the investments held for your Flying Colours SIPP. In such circumstances, you may choose one of the following options:
(A) retain your Flying Colours SIPP with the SIPP Provider by agreeing to the SIPP Provider’s separate terms and conditions (including its own charges and expenses). At your request, we can provide further information to you about this option; or
(B) arrange for your Flying Colours SIPP to be transferred to an alternative provider (see paragraph 9.4 below).
10.2 Each Arrangement within the Scheme will terminate immediately upon:
(A) the expiry (without withdrawal) of three months’ written notice given by you to us that you wish to make payment of a transfer value in respect of that Arrangement to another registered pension scheme or qualifying recognised overseas pension scheme and that transfer payment is made; or
(B) the provision of retirement benefits (see paragraph 7 above).
10.3 No fees at that time paid shall be refunded and those payable shall remain so. On termination the indemnity provisions in paragraph 8 (Indemnity and Liability) shall continue in full. Termination will be without prejudice to the completion of transactions already initiated and Metro Bank (as the case may be) is authorised to continue to operate the bank accounts relating to your Arrangements for the purposes of selling or receiving monies in respect of transactions already initiated and paying any expenses or fees due to us or other parties.
10.4 You can ask us to transfer all or part of your Flying Colours SIPP to another registered pension scheme or qualifying recognised overseas recognised pension scheme at any time. Further information is set out in the SIPP Key Facts Document.
10.5 We reserve the right, by providing 30 days’ written notice to you, to transfer your Flying Colours SIPP to another SIPP provider.
10.6 If you cease to receive advisory services from us (or otherwise the Advisory Agreement is terminated) we reserve the right, by providing 30 days’ written notice to you, to cease providing discretionary management services to you in relation to your Flying Colours SIPP. In such circumstances you may choose to take one of the options in paragraph 9.1 above.
11. Data Protection
11.1 The SIPP Provider is a “data controller” (as defined in the Data Protection Act 1998) in respect of the information supplied by you in the SIPP Application Form. You consent to the SIPP Provider using that information in order to administer your Flying Colours SIPP and you acknowledge that the information will be held on the SIPP Provider’s computer records and may also be used for underwriting or claims handling purposes.
11.2 You authorise disclosure in confidence of data to:
(A) Flying Colours, the Trustee, the Custodian and Metro Bank (as the case may be);
(B) any associate and any agent appointed to assist us in administering your Flying Colours SIPP and any person providing professional services to us;
(C) regulatory bodies; and
(D) insurance companies (directly or via a central register).
11.3 The SIPP Provider will adhere to and comply with the provisions of the Data Protection Act 1984 and 1998 and any subsequent amendments thereto and the Data Protection Principles.
12. Administration Services
12.1 In respect of your Flying Colours SIPP, the SIPP Provider will provide the following services:
(A) establishment of your 1,000 Segments within your Arrangement under the Scheme and any other Arrangements needed to accept the transfer-in of income withdrawal beneﬁts;
(B) setting up administration record systems;
(C) confirmation of transfer payments into/out of the Scheme;
(D) maintenance of records, including portfolio valuations and contract notes received from investment managers/advisers;
(E) recovery of basic rate tax on contributions;
(F) recovery of tax deducted at source on investment income, where permitted;
(G) annual statements detailing assets, contributions and transfer payments received and amounts of tax recovered from HMRC;
(H) creation of banking facilities with Metro Bank;
(I) maintaining records of each investment transaction (save where this function is carried out by Flying Colours) and presentation of reconciled ﬁnancial statements to you on at least an annual basis;
(J) settlement and payment of beneﬁts on vesting;
(K) administration of the income withdrawal facility where taken in accordance with the rules of the Scheme including a quotation of the maximum pension permitted by HMRC legislation; and
(L) such other services as may from time to time be necessary to efficiently administer your arrangements and to comply with HMRC requirements.
13. Communications with the SIPP Provider
13.1 If you have any questions or concerns relating to your Flying Colours SIPP, you should contact us in the first instance, and we will contact the SIPP Provider on your behalf. You should not seek to contact the SIPP Provider directly.
SECTION 4: BEST EXECUTION POLICY
We are committed to treating you fairly when we manage your Account. As part of this commitment, we have prepared this Best Execution Policy (“Policy”) to provide you with information on how we will transmit orders to place deals in investments for your Account.
Under the FCA’s Rules, when transmitting orders to other entities (such as third party brokers) for execution, we are required to act in your best interests, and to take all reasonable steps to obtain the best possible result (the “Best Execution Obligation”). This Policy therefore sets out the most important aspects of the arrangements that we have put in place to comply with our Best Execution Obligation.
By opening an Account with Flying Colours, you agree to this Policy. You understand that we must keep this Policy under review. We therefore review it at least once a year. If we update our Policy, we will let you know by posting a notice (and the updated Policy) on our Website.
Order Execution Methods
As an investment manager, Flying Colours makes, and then gives effect to, decisions to deal in investments on behalf of your Account. There are two methods of giving effect to these decisions:
- we can transmit an order to a third party intermediary (e.g. a stockbroker or investment bank) for that third party to carry-out on our behalf; or
- we can carry-out the transaction on your behalf directly with the relevant counterparty or exchange. The counterparty or exchange with whom we (or a third party) may choose to execute such transactions is referred to in this Policy as an “Execution Venue”.
Currently, we only deal by transmitting orders to intermediary brokers. We have explained this in more detail below.
The Intermediary Broker
We currently use the services of Capital International Limited (“CIL”) to provide order execution services in respect of your Account, as well as custody and settlement services. CIL may (under our agreement with CIL) use the services of Pershing Securities Limited (“PSL”) (together the “Brokers”). We have selected CIL, taking into account our Best Execution Obligation and our Broker Review Procedure (as set out below). We have reviewed CIL’s dealing arrangements and are satisfied that it considers all of the Execution Factors (and places relative importance on these Execution Factors) in a manner that corresponds with our own Policy. We therefore reasonably expect to obtain results from CIL that are at least as good as results that could be expected from other alternative intermediaries, and we monitor CIL’s performance to check that this is generally the case (see below).
Broker Review Procedures
We selected CIL due to the quality and price of the services it provides in respect of execution and settlement. We have reviewed its dealing policies and procedures, and we understand that CIL (and, where relevant, PSL) has execution arrangements in place that should enable us to comply with our Best Execution Obligation to you. The financial strength of CIL was also considered, and CIL may no longer be used by Flying Colours if there are any doubts about its financial soundness. We have also appointed CIL (which has in turn appointed PSL) on terms that provide CIL will provide best execution, taking account of the Execution Factors, when we place orders with them.
CIL is licensed by the Isle of Man Financial Services Authority and is subject to a similar best execution obligation to equivalent firms in the UK. CIL is not required (by the regulations applicable in the Isle of Man) to have in place a formal written order execution policy. However, CIL has confirmed to us that is takes account of the Execution Factors when either carrying-out deals or instructing PSL to carry-out deals on its behalf (as is described in more detail below). We have reviewed CIL’s arrangements and are satisfied that its dealing procedures are compatible with our obligations to you.
PSL is authorised and regulated by the FCA, and therefore owes a duty of best execution in respect of the deals it executes for CIL. Under the FCA Rules, PSL is obliged to have in place a written order execution policy that it will follow when carrying out or orders. CIL has confirmed that it has obtained a copy of PSL’s order execution policy, and will monitor PSL’s performance to check that it is complying with its policy.
As noted above, we regularly review our order execution arrangements, including the price, quality and efficiency of CIL, taking into account all orders executed during the review period. We will take steps to remedy any deficiencies identified in such reviews, including finding replacement or alternative brokers if necessary.
The factors (the “Execution Factors”) that we require CIL to take into account when placing orders on your behalf will include:
- the price of the investment;
- the costs associated with the transaction (including expenses relating to the transaction which will be charged to your Account);
- the likely speed of getting the transaction done;
- the likelihood of execution and settlement;
- the size and nature of the order; and
- any other consideration relevant to the execution of the order in question (including market impact).
While price and costs will generally be the key factors in any decision to deal, the overall benefit to you of a particular transaction may be affected by the other Execution Factors. This means that CIL’s obligation to try and obtain the best possible result when carrying-out our orders may not necessarily always equate to the best headline price in every case.
When determining the relative importance of each of the Execution Factors, CIL will take into account the following criteria:
- the fact that we have classified you as a “retail” client;
- the characteristics of the particular order, and the characteristics of the investment that is subject to that order; and
- the characteristics of the Execution Venues on or with which the order can be placed.
Transmitting orders to CIL
We provide a risk-managed, discretionary portfolio management service in respect of your Account which predominantly invests in collective investment schemes (“CIS”) and exchange traded funds or similar exchange traded products (“ETFs”). When we decide to invest in a CIS or ETF, we will promptly instruct CIL. However, the timing of these deals will be at our discretion.
If we instruct CIL to invest in a CIS, CIL may execute the order through the following Execution Venues:
- directly with the fund manager or the CIS; or
- via a platform or fund supermarket, typically CoFunds, Novia, Transact or Ascentric.
Shares/units in CIS are normally only available to buy or sell at one price, set by the fund provider, therefore issues of best execution do not typically arise. CIL may be able to obtain a better result for Flying Colours’ clients by investing in a CIS via a platform/fund supermarket, usually on negotiated terms not generally available to individual clients.
If we instruct CIL to invest in an ETF or an investment trust, it will (or will procure that PSL will) do so primarily on the Execution Venues outlined below. These Execution Venues have been selected as being the dominant investment exchange for retail client orders in the relevant jurisdiction, with comprehensive rules governing trading:
- London Stock Exchange,
- PLUS Market,
- Irish Stock Exchange,
- Paris Euronext,
- Frankfurt Xetra, and
- SIX Swiss Exchange.
It is our expectation that orders to invest in an ETF or investment trust shall normally be executed on the London Stock Exchange. However, choice of Execution Venue is the responsibility of the broker to whom the order is given (be that CIL or PSL), subject to the requirement to provide best execution at all times.
The above Execution Venues are those on which CIL (or, if applicable, PSL) will place significant reliance. However, CIL has reserved the right to use other Execution Venues where it considers it necessary or appropriate in accordance with its best execution obligations to Flying Colours. CIL may also, with our agreement, add or remove an Execution Venue from the above list from time to time.
However, CIL and PSL will only execute orders in respect of your Account on a regulated market or multilateral trading facility. CIL will need our express consent to execute one of our orders outside of a regulated marketed or multilateral trading facility; we would then need to obtain your consent in order to proceed.
When will we instruct CIL to deal?
We shall review your Account from time to time against your selected Risk Profile. We may subsequently rebalance your Account to ensure that it is consistent with the asset allocation mandated for your Risk Profile.
A daily reconciliation shall be carried out of the cash balance held for your Account, to make sure that cash does not exceed (or fall below) the 2% tolerance that we have agreed with you. If you have excess cash in your Account (for example, due to additional investments or income paid out on your investments), we will place orders with CIL to buy investments in accordance with your selected Risk Profile. Conversely, if the cash in your account has fallen below the 2% tolerance, we will instruct CIL to sell investments in accordance with this Policy.
We shall record all decisions that are made to buy/sell a particular investment that is allocated to your Account, and (once such a decision is made) we shall place the relevant order with CIL as soon as possible, taking into account our Best Execution Obligation.
Your orders may be aggregated (combined) with those of our other clients for execution where we reasonably believe that this is in the overall best interests of our clients. However, the effect of order aggregation may, on some occasions, work to a particular client’s disadvantage. CIL and PSL may also aggregate orders placed in respect of your Account with orders of their other clients for execution.
Intended allocation of all orders is recorded in advance by Flying Colours. Where there is only partial execution of orders, allocation will be on a proportionate basis, rounded where necessary to take account of the deal size of the investment in question.
Paying our Broker
CIL’s fees are paid out of the Platform Charge applicable to your Account, which is detailed in Section 8.
Conflicts of interest
In order to minimize conflicts between ourselves and our clients, all investments must be placed in accordance with the Personal Account Dealing Policy maintained by Flying Colours.
Potential conflicts between different client accounts are minimized by pre-allocating all orders before transmitting them to CIL for execution. Orders and subsequent executions are made by our back office staff that are independent of the portfolio managers and are monitored by the compliance officer. Partially completed orders are allocated pro rata (subject to rounding). Further information is set out in our Conflicts of Interest Policy (see Section 6 of our Terms and Conditions).
Specific instructions from you
If you wish to withdraw funds from your Account or close it, we may have to liquidate investments in order to meet your instruction. Where we can, we will place sell orders to meet your withdrawal instruction in accordance with this Policy. However, if you have given us specific instructions (for example, if you have asked us to satisfy the withdrawal request by a specific deadline), this may limit the extent to which we can abide by this Policy. Similarly, CIL may not be able to satisfy its own best execution obligations in these circumstances.
We will not advise you on the purchase or disposal of your investments. If you ask us to place a deal in a way which means we (or CIL) cannot consider all of the Execution Factors, we may not be able to obtain the best possible results for you.
SECTION 5: CUSTOMER INVESTMENTS AND RISKS
We have set out below a number of general risks which may apply when you receive investment services from us and a number of other specific risks which are associated with the types of investment we may hold for your Account. Please be aware that the risks highlighted below are not exhaustive as other risks may exist with respect to our service specific to your circumstances and new risks may also arise from time to time depending on circumstances at the relevant time.
Risk of loss in value
The investments held for your Account are subject to loss in value. There can be no assurance that any appreciation in the value of investments will occur. The value of investments and the income (if any) derived from them may fall as well as rise and you may not recoup the original amount you invested. You may lose the value of your entire investment in our service.
Fluctuations in value
The investments held for your Account are subject to fluctuations in value over time. The extent to which your Account will be subjected to such fluctuations will depend on the composition of investments held for your Account.
The past performance of your investments is not a guide to future performance. Flying Colours does not guarantee the performance of your Account.
An investment in our service should be considered as a medium to long-term investment. If you are investing in the service otherwise than through a Flying Colours SIPP, it is suggested that you retain your investment for a minimum of 2 years.
A number of other general risks apply where all or part of your Account is held in a Flying Colours SIPP:
- If you start to draw benefits from your Flying Colours SIPP earlier than you originally planned, the level of benefits you can take may be lower than that which you expected and may not meet your retirement needs.
- Payments taken from your Flying Colours SIPP are subject to income tax. Therefore, you may have to pay a significant amount of tax if you make large withdrawals in a short period of time.
- If benefits are taken from your Flying Colours SIPP this may erode the capital value of your Flying Colours SIPP.
- Charges deducted from your Flying Colours SIPP will impact on the value of your Flying Colours
- You should be aware that the pension you receive from your Flying Colours SIPP is not fixed nor guaranteed for life. If security of income is important to you then you should consider purchasing an annuity.
- The level of income you may receive from an annuity is based upon the average life expectancy of a person of your age. When annuity providers set annuity rates, they take into account the fact that some people will die earlier than expected, and thereby effectively subsidise those who live longer. Benefits that are paid from a SIPP do not have the benefit of this subsidy.
- Annuity rates are subject to change and there is no guarantee that they will improve in the future.
The investments held for the benefit of your Account will be made in collective investment schemes (commonly known as “funds”). The funds in which we may invest include certain funds known as Exchange Traded Funds (or “ETFs”). There are a number of specific risks associated with such investments, a number of which are summarised below.
- The performance of a fund is dependent on its investment policy and strategy, the skills and expertise of those responsible for managing its investments, and the market(s) in which it invests.
- Funds may be valued for pricing and dealing purposes on a frequent basis (for example, daily or weekly) or an infrequent basis (for example, monthly or even less frequently). Certain funds may therefore represent relatively illiquid investments.
- A fund may be subject to suspensions in valuation, during which time dealing in a fund will not be possible. Such suspensions generally occur in exceptional conditions, for instance where the investments of the fund cannot be accurately valued or during periods of significant market turmoil.
- Some funds will benefit from higher levels of regulatory supervision depending on their nature and form and the jurisdiction(s) in which they are subject to regulatory supervision.
- Investments made in funds denominated in currencies other than Sterling (or funds, the investments of which are denominated in currencies other than Sterling) give rise to exchange rate risk.
- ETF shares are listed and admitted to trading on a regulated market, such as the London Stock Exchange. Investors may buy and sell an ETF’s shares from the market(s) on which such shares are listed or admitted to trading.
- ETF shares may not be sold during periods in which the relevant market(s) are closed for business.
- Most ETFs seek to track the performance of a particular index. However, most ETFs are subject to a degree of “tracking error” with respect to the ability of the ETF to track the performance of the index they are seeking to replicate.
- Certain ETFs use over-the-counter derivatives issued by counterparties to replicate the performance of the index being tracked. Such ETFs are therefore subject to counterparty risk.
- Investment trusts are public listed companies. This form of fund is closed-ended, which means that an investment trust only has a fixed number of shares.
- Investment trust shares may not be sold during periods in which the market is shut.
- Investment trusts typically borrow money in order to seek to maximise investment opportunities. This strategy may increase returns, but has the potential to increase losses.
SECTION 6: CONFLICTS OF INTEREST
Flying Colours is committed to maintaining the highest professional standards and therefore we to identify, consider and manage potential conflicts of interest to ensure that we treat all of our customers fairly and in accordance with FCA Rules and principles.
Nature of a conflict of interest
In essence, a conflict of interest is a situation in which Flying Colours (or its any of its staff) finds itself in a position where its own interests conflict with the duties and obligations owed to its customers or, a situation in which the Flying Colours’ duty to one client conflicts with its duty to another.
Identifying conflicts of interest
For the purposes of identifying the types of conflict and potential conflicts that arise which may entail a material risk of damage to the interests of a client, we must take into account whether Flying Colours or a relevant person, or a person directly or indirectly linked by control to Flying Colours:
- is likely to make a financial gain, or avoid a financial loss, at the expense of a client;
- has an interest in the outcome of a service provided to a client or transaction carried out on behalf of a client, which is distinct from the client’s interest in that outcome;
- has an incentive to favour the interest of another client or group of clients over the interests of the client;
- carries on the same business as a client, or
- receives or will receive from a person other than a client an inducement in relation to a service provided to the client, in the form of remuneration, goods or services, that is not the standard commission or fee for that service.
We have identified a number of situations which may give rise to a conflict of interest. These situations include, but are not limited to, the following:
- acting for more than one client in a transaction or with respect to an investment (this could include where we are acting for joint account holders);
- when we know confidential information about one client which, if disclosed to another client, could be beneficial to that other client;
- we receive gifts, entertainment or other benefits would could give rise to a conflict with respect to the duties that we owe to our clients;
- where our employees pursue activities which could be potentially detrimental to our clients; and
- where our employees invest for their own account in certain investments in which we provide advice or are otherwise retained as investments for client accounts.
We organise our business in such a way as to avoid conflicts of interest arising.
For conflicts of interest which are unavoidable, we have put in place procedures which are designed to ensure that the management of any conflict takes place in such a way that Flying Colours (and its personnel) are not advantaged and that no client is disadvantaged. All of our employees are provided with training in these procedures and the standards of conduct expected of them. Ultimately, it is Flying Colours’ management which remains responsible at all times for ensuring that such procedures are appropriate and that employees act accordingly.
Specifically, we have put in place the following procedures to assist in our identification and management of conflicts of interest:
- Conflict Log: We maintain a list of all conflicts of interest identified. With respect to each conflict, the log details the measure put in place to monitor and manage the conflict of interest.
- Protection of information: We maintain appropriate safeguards to protect sensitive information which could give rise to conflicts of interest. These measures are designed to prevent unauthorised access, inappropriate use, or inappropriate dissemination of such information.
- Separation of functions: Where our internal functions might give rise to conflicts of interest, we put in place arrangements to separate such functions and ensure that separate management and reporting lines are established.
SECTION 7: CUSTODY TERMS
Part 1 – General
1. Capital International Limited
1.1 This Section 7 contains the Custody Terms which, in addition to the Terms, apply in respect of the services to be provided by the Custodian in respect of your Account. The terms in this section comprise a legally binding agreement between you, us and the Custodian.
1.2 The Custodian, Capital International Limited, is incorporated in the Isle of Man (registered number 123722C). It is licenced by the Isle of Man Financial Services Authority of Finch Hill House, Bucks Road, Douglas, Isle of Man, IM99 1DT. The Custodian is a member of the London Stock Exchange.
1.3 The Custodian shall provide to you safe-custody and settlement services in respect of your Account. In the provision of its services to you it shall act in accordance with all applicable laws including the Rulebook (as defined below).
1.4 In respect of the safe-custody and settlement services (“Custody Services”) to be provided to you by the Custodian, it shall do so relying on the information provided by you and the instructions provided by Flying Colours, and is only responsible for acting in accordance with such information and instructions.
1.5 Based on the information provided by Flying Colours, the Custodian has classified you as a “retail client” for the purposes of the Isle of Man Financial Services Act 2008 Financial Services Rule Book (the “Rulebook”). This means that the Custodian will provide the custody and settlement services to you in respect of your Account in accordance with the regulatory protections afforded to retail clients in the Rulebook.
2. Your accounts with the Custodian
2.1 In respect of your Account, the Custodian will open and maintain accounts on its books in your name in order to provide the Custody Services to you. Note that these Custody Terms will not apply in respect of investments (including any cash) held within your Flying Colours SIPP, in which case Section 2 shall apply.
2.2 The Custodian reserves the right to refuse to open an account, to refuse to accept funds for investment, to refuse to accept any instruction, to stop providing services under these Custody Terms and to close any account that it holds and maintains in your name without giving prior written notice and without giving any reason for such decision, including (for example):
(A) where we or the Custodian have enquired into any transaction for purposes such as, but not limited to, the prevention of fraud or crime and have not received such information or explanation as we consider necessary in the circumstances; or
(B) where we or the Custodian suspect or have reasonable grounds to suspect that your Account is being used in relation to, or in connection with, any improper purpose or any criminal, fraudulent or other similar purpose; or
(C) if the instruction or receipt of funds for investment was accepted and effected by the Custodian, that transaction could give rise to some liability (civil or criminal) on its part or any employee or associated person of the Custodian’s; or
(D) where we or the Custodian have been informed by any court or governmental authority of any jurisdiction that you have, may have, or could have if such instruction or funds for investment was accepted, funds invested with us that are the proceeds of a crime committed or believed to be committed under the laws of any jurisdiction; or
(E) in any of the circumstances outlined in Section 1, paragraph 27.
2.3 If we or the Custodian decide to close your accounts with the Custodian, subject to paragraph 17.3 of section 1, you may be required to give us instructions on the future custody of your investments within your Account, so that the Custodian can transfer your money and investments (after deducting amounts owed to Flying Colours and/or the Custodian) to your new custodian.
2.4 The Custodian will only accept instructions in respect of your Account from Flying Colours and not directly from you. The Custodian may rely on and act on any instructions which the Custodian reasonably believes to have come from one of our authorised representatives. The Custodian is not responsible or liable to you for any delays or inaccuracies in the transmission of instructions or other information, provided:
(A) the Custodian reasonably believed (where applicable) that the relevant instruction came from one of our authorised representatives; and
(B) where an instruction is unclear, the Custodian has not acted on the instruction without first having obtained further written confirmation from us.
2.5 The Custodian will at all times comply with the relevant FCA Rules relating to the safekeeping of client assets and the Rulebook when providing the Custody Services in respect of your Account.
2.6 If you have any questions or concerns relating to your holdings with the Custodian, you should contact us in the first instance, and we will instruct the Custodian on your behalf. Unless otherwise specified in these Terms, you should not seek to contact the Custodian directly.
3. Dealing and Settlement
3.1 The Custodian will be responsible for executing any order or transaction on instruction from us acting on your behalf in the course of providing our discretionary management services.
3.2 Whilst the Custodian does not owe you a duty of best execution under the FCA Rules or the Rulebook when it carries out our instructions on your behalf, the Custodian owes us duties of best execution under the Rulebook. The Custodian has also agreed to a best execution policy under which it is required to achieve the best possible result when it executes transactions in accordance with instructions given by us on behalf of your Account.
3.3 By entering into the Agreement, you warrant that you have full and unfettered powers to engage the Custodian in accordance with these Custody Terms and you further warrant and represent to us that your investments are, and for the duration of the Agreement will remain, free from any lien, charge or other encumbrance. In other words, you confirm that no other person has, or will be granted, any right or interest over the investments held for you by the Custodian.
3.4 Subject to your compliance with the Agreement, we shall ensure that the Custodian receives the necessary investments, documents or cash (as the case may be) in order for the Custodian to settle transactions in respect of your Account. You agree that all transactions will be due for settlement in accordance with market requirements.
3.5 All payments due to us will be made without set-off, counterclaim or deduction. All investments and foreign exchange held or transferred to the Custodian (or its nominee) will be subject to a charge by way of security for your obligations to the Custodian, but only in so far as any such settlement obligation remains outstanding.
3.6 Where transactions executed on your behalf are settled by a third party (or, where relevant, CIL or CINL), such transactions may settle in the books of a relevant securities settlement system, other body or custodian, together with transactions for the account of other clients of Flying Colours. If this happens then the Custodian will allocate between Flying Colours’ investors the cash or investments received by it or on its behalf as a result of such settlements in accordance with the transactions recorded on its books and records. If the Custodian receives cash or investments for trades that Flying Colours intended to settle at the same time (but which, for whatever reason, do not do so), then the Custodian will allocate that cash or investments received by it on the following basis:
(A) in accordance with any priority for settlements determined by the Custodian prior to the transactions taking place;
(B) if transactions have the same priority, then the allocation will be in order of time, by reference to the intended settlement date of the transaction, so that the earliest in time will settle first in each case; and
(C) where transactions have the same priority and intended settlement date, then the allocation will be by value so that the larger or largest trade by value (not by number of units or size) will be settled first in each case.
(D) where these allocations are necessary, they will also be subject to the operation of the relevant securities settlement system, other body or custodian. Such operations may include a netting rule or practice, automatic splitting of unsettled transactions or other automatic aggregation, splitting or allocation.
4. Client Money
4.1 Money held by the Custodian for your Account will be held in compliance with the FCA Rules relating to the safekeeping of client assets and the Rulebook. This means that, amongst other things, the Custodian will hold your money in a designated client bank account which is kept separate from the Custodian’s and Flying Colour’s own funds. The Custodian may also agree with us from time to time that it may hold your money (in accordance with the Rulebook) with CINL or other appropriate settlement or custody agents appointed by the Custodian (“Eligible Custodians”).
4.2 Unless otherwise requested by you the base and reporting currency of your Account with us will be Sterling.
4.3 The Custodian will only hold or deal with your money in accordance with the FCA Rules relating to the safekeeping of client assets and the Rulebook, which among other things requires it to hold such money in a client bank account, established with statutory trust status. Your funds will therefore be segregated from its own funds at a recognised bank, as defined in the Rulebook. The recognised bank may hold such money with other clients’ money in a pooled account. This means that client money is held as part of a common pool of money, so you do not have a claim against a specific sum in a specific account; your claim is against the client money pool in general.
4.4 When considering where that client bank account should be, the Custodian will exercise due skill, care and diligence and will periodically review the adequacy and appropriateness of any bank or credit institution where client money is deposited and of the arrangements for holding the client money. These requirements will not apply where the client’s money is held with a central bank of a country. It is important to note that the Custodian is not responsible for any acts, omissions or default of a credit institution or bank chosen by it but only for taking care in its choice and monitoring of such bank or credit institutions.
4.5 Uninvested money (i.e. money not immediately required to settle a purchase or other transaction), may attract interest in accordance with paragraph 13 of section 1 above. The Custodian will pay interest gross where it is legally permitted to do so; whether interest is paid gross or net of tax or other deduction will depend upon the tax legislation and rules applicable to your account prevailing at the relevant time. Please also see paragraph 6 below.
4.6 In certain circumstances, the Custodian may hold or pass your money to an intermediate broker, settlement agent or “over the counter” (OTC) counterparty located in a jurisdiction outside the Isle of Man (or the UK). In these circumstances the legal and regulatory regime applying to such an intermediate broker, settlement agent or OTC counterparty will be different to that of the Isle of Man or the UK. In the event of a default or failure of that intermediate broker, settlement agent or OTC counterparty, your money may be treated differently to the way in which it would be treated if it were held by an intermediate broker, settlement agent or OTC counterparty in the Isle of Man or the UK.
4.7 If you are uncertain as to the implications of the forgoing clauses concerning the use of recognised banks, intermediate brokers and settlement agents or OTC counterparties you should consider taking independent legal advice.
As noted above, if you are invested in a Flying Colours SIPP, you should refer to section 3 for information concerning the holding of client money in respect of your Flying Colours
5. Custody of your Investments
5.1 Subject to Part 2 of these Custody Terms (see below), Investments purchased through your Account will be registered in the name of CINL or an Eligible Custodian. Documents of title relating to investments belonging to you and in your name may if so agreed, be held by the Custodian.
5.2 The Custodian is responsible for the acts of CINL to the same extent as if for its own acts, including for the avoidance of doubt, for losses arising from fraud, wilful default or negligence.
5.3 Overseas investments will be registered or recorded in either the name of CINL or that of an Eligible Custodian in one or more jurisdictions outside the Isle of Man or UK where, due to legal requirements or the nature of market practice in the jurisdictions concerned, it is in your best interests or it is not feasible to do otherwise. As a consequence of this such investments will not be segregated from investments belonging to us and therefore any protection afforded may be reduced should a default occur on the part of the person in whose name the investments are registered or recorded. Please note that investments which are held overseas may be subject to different settlement, legal and regulatory requirements than those which apply within the Isle of Man. The Custodian and Flying Colours will not be held liable in the event of a default by such a sub-custodian in any circumstances (however, this does not limit the Custodian’s or Flying Colours’ liability to you for their own respective fraud, wilful default or negligence).
5.4 Investments registered or recorded in the name of CINL (or Eligible Custodian (as outlined above)) may be pooled with those of one or more other clients of the Custodian. Accordingly, you should note that individual entitlements may not be identifiable by separate certificates, physical documents or equivalent electronic entries on the register. In the event of an irreconcilable shortfall following any default by the Custodian and/or an Eligible Custodian, you may not receive your full entitlement and may share in any shortfall pro-rata. We will not be held liable in the event of a default by the Custodian and/or an Eligible Custodian. However, we do not disclaim responsibility for losses arising directly from our own fraud, wilful default or negligence.
5.5 Please note that bearer investments may not be held by us or the Custodian, but by a third party, such third party will be an Eligible Custodian in accordance with the Rulebook. We do not accept responsibility, in the absence of our own negligence or wilful default, for the safe custody obligations of any third party, but prudence will be exercised by the Custodian in the selection of such agents.
5.6 Because your investments may be held on a pooled basis, additional amounts may arise that would not otherwise have occurred had such investments been registered in your own name (for example, following certain corporate actions). Consequently, you may not be entitled to these additional amounts.
5.7 Where investments are registered in the name of CINL or an Eligible Custodian, if notice is received by the Custodian of events or circumstances such as rights issues, conversions, take-overs or other offers or capital reorganisations, in respect of which rights are exercisable, the Custodian will contact us for instructions and in the absence of receipt of instructions from us, the Custodian will take the default action and shall not be liable to you for the outcome.
5.8 The Custodian will be responsible for claiming and receiving dividends, interest payments and other entitlements automatically arising in respect of the investments held for your Account.
5.9 Sometimes the Custodian or an Eligible Custodian who is holding your investments may receive dividends, interest and other rights or payments after local withholding or similar taxes or other deductions are made from those sums. You accept that the Custodian or any Eligible Custodian may, if it is required to do so to comply with legal or regulatory requirements, withhold or deduct tax or other amounts from any such payments. Any costs the Custodian or an Eligible Custodian incurs when complying with these obligations may be deducted by the Custodian from your Account. If you are eligible to reclaim any such withholdings or deductions then this will be your responsibility and not that of Flying Colours, the Custodian or an Eligible Custodian, to do so.
5.10 The Custodian will not loan your investments or use them to raise finance.
5.11 As noted above, if you are invested in a Flying Colours SIPP, you should refer to section 3 for information concerning the holding of your investments in respect of your Flying Colours SIPP.
6. EU Directive on the Taxation of Savings Income
6.1 Account holders who are individuals and who are resident in a Member State of the European Union (“EU”) are subject to Isle of Man legislation implementing the European Union Directive on the Taxation of Savings Income (“EUSTD”) in the Isle of Man.
6.2 This means that the Custodian is obliged to report to the Isle of Man Treasury savings income and interest payments paid to individuals who are resident in EU Member States. The rules are detailed and if you are in a doubt about this matter we would advise that you take tax advice. You should note that this obligation will cease during the course of 2016, in which connection please refer to paragraph 7 below.
7. UK FATCA and the proposed Common Reporting Standard
7.1 In December 2012 the Isle of Man Government announced that it would be entering into an automatic exchange of information agreement leading to greater tax co-operation with the UK. The result of this agreement is that the Custodian is obliged to provider a broader range of information to HMRC in respect of UK resident tax payers than that already provided under the European Savings Tax Directive.
7.2 In addition, on 29 October 2014, the Isle of Man Government entered into the OECD Common Reporting Standard (CRS) Multilateral Competent Authority Agreement with an intended first exchange of information due in September 2017. The result of this agreement is that the Custodian will be obliged to provide the same information as outlined in paragraph 7.1 to a wider range of recipient countries.
7.3 If you require further information in respect of the above disclosure and reporting rules, you should seek advice from a qualified tax adviser in respect of your particular circumstances.
8. The Custodian’s responsibility to you for loss
8.1 Subject to the Rulebook neither the Custodian nor its employees, sub-contractors, agents and delegates shall be liable for any loss suffered by you under the Custody Terms unless such loss arises from its or their negligence, wilful default or fraud or from their failure to comply with applicable laws including, without limitation, the Rulebook. The Custodian does not otherwise accept liability for loss or damage that you may suffer as a result of the provision of services under these Custody Terms.
8.2 The Custodian will not be held liable for any loss incurred by you which arises, either wholly or in part, as a result of an event which is beyond its control to prevent and the effect of which is beyond its power to avoid in relation to your Account and which may arise from delays or changes in market conditions, market fluctuation, currency fluctuation, computer failure, labour dispute, inability to communicate with market makers, or for any other reason and whereby we are either unable to take or refrain from taking or shall not be obliged to take or refrain from taking any action as a consequence thereof.
8.3 The Custodian will be entitled to act on instructions given to it by the methods set out in the Terms and in the Custodian Appointment Agreement. The Custodian may decline to implement any instructions in circumstances where it believes sufficient resources may not be available in your Account or for any other reason it considers appropriate, and we will inform you when this is the case.
9. Consequences of default
9.1 You agree the Custodian shall be entitled to the benefit of a lien, right of retention or right of set off (without further notice to you) over the cash and investments held for your Account for the purposes of securing its properly incurred charges and liabilities arising from the provision of its custody services in relation to your Account. In other words, this broadly means that the Custodian is entitled to hold and/or use the cash and investments it is holding for your Account in order to account for any amounts owing to the Custodian for performing its services in relation to your Account (for example, if the Custodian is unable to recover its fees and charges).
9.2 You agree that the Custodian is permitted to enter into an agreement with an Eligible Custodian or other third party for custody services which confers on such Eligible Custodian or third party a right of lien, right of retention or sale or right of set off in favour of that party unless the lien or right:
(A) is limited to the cash and investments held for your Account and then only for the purposes of securing any sums properly due to the Eligible Custodian or other party in respect of properly incurred charges and liabilities arising from the provision of custody services in respect of the cash and investments held for your Account;
(B) arises under the operating terms of a securities depositary, securities settlement or central counterparty in whose account the relevant cash and investments are recorded or held, and provided that it does so for the purpose only of facilitating the settlement of trades involving cash and investments held for that Account;
(C) arises in relation to those safe custody assets held in a jurisdiction outside the United Kingdom, provided that the Custodian does so as a result of local applicable law in that jurisdiction or where it is necessary for that firm to gain access to the local market in that jurisdiction and where the Custodian has been instructed by us to hold those safe custody assets in that jurisdiction notwithstanding that lien or right.
9.3 The provisions in this paragraph will continue to apply even if the Custodian stops providing services to you, so long as any obligations for your Account remain outstanding. They apply in addition to any other right the Custodian has, and they will not be affected by any failure by the Custodian or anyone else to fully enforce their contractual rights, whether as to payment, time, performance or otherwise.
10. The Custodian’s conflicts of interest
10.1 It is possible that the Custodian may have an interest, relationship or arrangement that is material to a particular investment transaction or the service concerned. For example, the Custodian may be involved in a rights issue, a new issue, take-over or similar transaction. The Custodian’s employees are, however, required to comply with a policy of independence and disregard any such interest when providing the Custody Services to you.
10.2 In addition, it should be noted that the Custodian both provides to and receives from associated companies a range of administrative and back office and investment services.
10.3 A summary of the Custodian’s Conflicts of Interest policy can be made available upon written request to us.
11. Record Retention
11.1 In accordance with legal and regulatory requirements, the Custodian will retain your records, for a minimum period of six years following the termination of any relationship between us.
11.2 This period may be extended by force of law, regulatory requirement or agreement amongst us.
12. Data Protection
12.1 The information the Custodian and any Eligible Custodian hold about you is confidential and will not be used for any purpose other than in connection with the provision of the Custody Services, and where necessary for these purposes, may be disclosed to any company within the Custodian’s group of companies or any company within the group of companies to which an Eligible Custodian belongs. Information of a confidential nature will be treated as such provided that such information is not already in the public domain. Information of a confidential nature will only be disclosed outside our group of companies or the group of companies to which an Eligible Custodian belongs, in the following circumstances:
(A) where the law or a regulatory rule permits or demands, or
(B) it is in the public interest, or
(C) to investigate or prevent fraud or other illegal activity;
(D) to the Custodian’s agents in connection with running accounts and services for you at your request or with your consent.
12.2 In accordance with the Data Protection Act 2002, (Isle of Man) you are entitled, on payment of a fee, to a copy of the information which the Custodian holds about you.
12.3 You should let us know if you think any information the Custodian holds about you is inaccurate, so that we may ask the Custodian to correct it.
12.4 The Custodian may use, store or otherwise process personal information provided by you or us in connection with the provision of the services for the purposes of providing the services, administering your account or for purposes ancillary thereto, including, without limitation, for the purposes of credit enquiries or assessments.
12.5 Please be advised that, by entering into the Agreement, you will be consenting to the transmittal of your data outside of the Isle of Man and the European Economic Area.
12.6 In accordance with the Record Retention Statement, you will not be at liberty to request the destruction or deletion of any record pertaining to yourself unless we are required to do so by force of law or other regulatory requirement.
13. USA legal considerations – Patriot Act
13.1 In the course of the provision of services to you the Custodian or its Eligible Custodians may maintain correspondent accounts in dollars in the United States of America (US), which are subject to the jurisdiction of the US. The US has enacted a statute, called the USA PATRIOT Act, which authorises federal authorities to seize funds in such a correspondent account in the US if the US perceives that the correspondent bank is holding the proceeds of crime, whether committed in or through the US, or not, and whether the alleged wrong-doer’s account is in dollars or in another currency, so long as the alleged wrong-doer has funds on deposit with the correspondent bank which in turn has funds in the US. If bank funds are frozen, the bank may not defend the forfeiture action against its own funds except to the extent that it has already paid the funds out, which limits the liability of the bank to the value of the funds in the alleged wrong-doer’s account, but provides for no defence of the alleged wrongdoer’s conduct. What that means for you is as follows:
13.2 You agree that you will not remit funds or transfer assets to us which are the proceeds of crime.
13.3 You agree that if any funds are frozen by order of a court of competent jurisdiction in the US as part of a forfeiture proceeding:
(A) you will defend the forfeiture action at your own risk and expense as provided for by US law; or
(B) you will authorise us to instruct the Custodian to pay the frozen funds over to the US Court issuing the freezing order or its designee, at our discretion. You agree that you are aware that the Custodian is forbidden from defending, and will not defend, your interest in such a forfeiture proceeding.
13.4 You further agree that if the Custodian is directed to freeze the value of your assets pursuant to the USA PATRIOT Act by order of a court of competent jurisdiction you will not seek to have the Custodian release such frozen funds unless and until there has been a final order releasing the freezing order.
13.5 To the extent that you lawfully may do so you agree that you will not make any claims against Flying Colours or the Custodian under the laws of any nation or political entity for release or repayment to you of the value of funds frozen or forfeited pursuant to the USA PATRIOT Act prior to the release of such funds.
13.6 Subject to any restrictions imposed by law we agree that if a freezing order or a forfeiture order directly or indirectly connected to your account is served upon the Custodian, we will notify you of the existence of such order in timely fashion.
14. USA legal considerations – Foreign Accounts Tax Compliance Act (FATCA)
14.1 In the course of the provision of services to you the Custodian or its Eligible custodians may maintain correspondent accounts in Dollars in the United States of America (US), which are subject to the jurisdiction of the US. The US has enacted a statute, called the Foreign Accounts Tax Compliance Act, which is designed to ensure that the US recovers all tax due and payable by US Persons. FATCA has the consequence of also affecting Non-US Persons who choose to invest in US Dollar denominated securities and/or hold US Dollars.
14.2 The Custodian falls within the definition of a “Foreign Financial Institution” in the legislation and as a consequence this places new burdens upon the Custodian. The Custodian is required to identify persons who are either US Persons or non US Persons resident in the US, who are either direct individual clients or indirect (via a Company, a partnership, a Trust or an unincorporated association) clients. You are required to notify us if you are or become a “US Person”.
14.3 In relevant circumstances the Custodian is required to either report on or withhold tax (on what are known as pass thru payments) on US source income which includes inter alia bank interest and dividends on equities. In addition, if you fail to supply us with the requisite information this may also affect the way in which you are categorised by the Custodian and may make you liable to taxation on gross proceeds of sale of equities. The rules are detailed and if you are in a doubt about this matter we recommend you seek independent tax advice from a suitably qualified professional tax advisor in respect of your particular circumstances.
Part 2 – Pershing Securities Limited (“PSL”)
15. Appointment of PSL
15.1 In the event that your Account includes investments that are listed on a Recognised Investment Exchange and settled through a Recognised Clearing House (such terms as defined in the FCA Handbook), the Custodian has appointed PSL to provide safe custody and settlement services in respect of such investments. Accordingly, where applicable, such investments within your Account will be registered in the name of Pershing Nominees Limited for the account of CINL or by such other Eligible Custodian as may be notified to the Custodian and Flying Colours from time to time.
15.2 The Terms in this section comprise a legally binding agreement between you and Pershing. Pershing is regulated by the Financial Conduct Authority (FCA) and is a member of the London Stock Exchange and LIFFE. Pershing is registered in England, company number 2474912, and has its registered office at Capstan House, One Clove Crescent, East India Dock, London E14 2BH.
15.3 You confirm that:
(A) We and the Custodian have your authority to engage PSL to provide settlement, safe custody, nominee and associated services for you;
(B) We and the Custodian have your authority to give instructions to PSL on your behalf;
(C) You agree to be bound by the obligations to PSL as set out below.
16. Your Money
16.1 Your money will be held by PSL as client money, in accordance with the rules of FCA, which among other things, require them to hold your money in a client bank account, established with statutory trust status. Your funds will therefore be segregated from PSL’s own funds at an approved bank, as defined by the FCA. The approved bank may hold such money with other clients’ money in a pooled account in the name of Pershing A/C Client. This means that client money is held as part of a common pool of money, so you do not have a claim against a specific sum in a specific account; your claim is against the client money pool in general.
16.2 Client money in a foreign currency may be held in the country of origin, or the sterling equivalent protected in a UK bank. Money held in the country of origin will be held by an approved bank or depository, even though in a small number of countries, that bank or depository has failed to acknowledge that clients’ funds will be afforded trust status, and as such has not accepted that it has no right of set off or counterclaim against money held in that client account, in respect of any sum owed on any other account of PSL. The legal and regulatory regime applying to such an approved bank or depository will be different to that of the United Kingdom. In the event of a default or failure of that foreign bank or depository, your money may be treated differently to the way in which it would be treated if it were held at an account in the UK.
16.3 In certain circumstances, PSL may hold your money in a bank outside the UK that does not meet the criteria of an approved bank. These circumstances are governed by strict conditions set out by the FCA. Any client money held for you at non-approved banks outside the UK must relate only to the settlement of transactions or the distribution of income. Client money will only be held in such banks because it is not possible to use approved banks due to the applicable law or market practice. In these circumstances, your money will only be held in such banks for as long as it takes to effect the necessary transactions. Such a bank may have failed to acknowledge that clients’ funds will be afforded trust status, and as such has not accepted that it has no right of set off or counterclaim against money held in that client account, in respect of any sum owed on any other account of PSL. The legal and regulatory regime applying to such a non-approved bank will be different to that of the United Kingdom. In the event of a default or failure of that foreign bank, your money may be treated differently to the way in which it would be treated if it were held at an account in the UK.
16.4 PSL is part of The Bank of New York group of companies, and may use a group bank to hold client money on your behalf. In particular, you should note that your money may be held at any branch of The Bank of New York.
16.5 The Custodian may undertake a transaction for you that involves your money being passed by the Custodian or PSL to any third party in connection with that transaction, including (but not exclusively) an exchange, clearing house, intermediate broker, settlement agent or OTC counterparty located either in the UK, or in a jurisdiction outside the United Kingdom. In the event of your money being passed to a third party, including (but not exclusively) an intermediate broker, settlement agent or OTC counterparty, outside of the UK, the legal and regulatory regime applying to the intermediate broker, settlement agent, or OTC counterparty may be different to that of the United Kingdom. In the event of a default of that entity, your money may be treated differently to the way it would be treated if it were held in the United Kingdom.
16.6 In certain circumstances, PSL may hold client money for you that has been allocated to you but has not been claimed by you. PSL will cease to treat as client money any unclaimed balances after a period of six years. However, this will only occur if PSL has taken reasonable steps to determine that there has been no movement on the balance during this period (notwithstanding any payments or receipts of charges, interest or similar items). The Custodian or PSL will attempt to contact you at your last known address, and you will be given 28 days from the date of notification of the intention to cease to treat the balance as client money to make a claim. You should note that PSL undertakes to make good any valid claim against balances that were released from being treated as client money, upon the provision by you of information to evidence the validity of your claim.
17. Custody Of Your Investments
17.1 Acceptance of these Custody Terms provides authority for PSL to hold your investment in safe custody, to transfer securities held for your account to meet sales effected for your Account, acceptance of offers, or other matters covered by these Terms.
17.2 UK registered securities which PSL are holding for you, will be held in either their physical possession, or in uncertificated form in CREST and if so, will be registered in the name of PSL’s nominee company in accordance with the rules of the FCA.
17.3 PSL is responsible for the acts of its nominee to the same extent as for its own acts, including, for the avoidance of doubt, for losses arising from fraud, wilful default or negligence.
17.4 You consent to the fact that overseas investments may be registered or recorded in the name of an Eligible Custodian or in the name of PSL in one or more jurisdictions outside of the United Kingdom, where, due to legal requirements or the nature of market practice in the jurisdictions concerned, it is in your best interests, or it is not feasible to do otherwise. As a consequence of this, your investments will not be segregated from investments belonging to PSL and therefore, your protection may be less should a default occur on the part of the person in whose name the investments belonging to you are so recorded. Investments belonging to you which are held overseas may be subject to different settlement, legal and regulatory requirements than those that apply in the United Kingdom. PSL will not be held liable in the event of a default by a custodian. However, PSL does not disclaim responsibility for losses arising directly from its own fraud, wilful default or negligence.
17.5 Investments registered or recorded in the name of a nominee or custodian (as outlined above) will be pooled with those of one or more of PSL’s other clients. Accordingly, your individual entitlements may not be identifiable by separate certificates, physical documents or equivalent electronic entries on the register. In the event of an irreconcilable shortfall following any default of the eligible custodian responsible for pooled investments, you may not receive your full entitlement and may share in that shortfall pro-rata. A further effect of pooling can be that following an allocation or share issue that favours the small investor, your allocation may be less than it otherwise would have been, had your investments been registered in your own name.
17.6 PSL uses a wide range of Eligible Custodians globally to hold your investments. You should be aware that PSL may use another company in the group of companies to which PSL belongs as an eligible custodian.
17.7 Please note that your bearer investments may not be held by PSL, but by a third party. Such third party will be an eligible custodian in accordance with the rules of the FCA. PSL does not accept responsibility, in the absence of its own fraud, negligence or wilful default, for the safe custody obligations of any third party, but prudence will be exercised in the selection of such agents.
17.8 Because your investments are held on a pooled basis, additional amounts may arise that would not otherwise have occurred had such investments been registered in your own name (for example, following certain corporate actions). Consequently, you are not entitled to these additional amounts. PSL allocates such shares to an account, which we administer and may use them to offset against any debits arising on dividends or other corporate events.
17.9 PSL will be responsible for claiming and receiving dividends, interest payments and other entitlements accruing. The Custodian will be responsible for instructing PSL to:
(A) exercise conversion and subscription rights;
(B) deal with takeovers or other offers or capital reorganisations;
(C) exercise voting rights.
17.10 Any fees or costs payable by you in relation to the safe custody service will be notified to you on our current charging schedule.
18. Record Retention
18.1 In accordance with legal and regulatory requirements, PSL will retain your records, for a minimum period of six years following the termination of any relationship between us. This period may be extended by force of law, regulatory requirement or agreement amongst us.
Part 3 – General
19.1 Any failure by the Custodian and/or PSL (whether on an ongoing basis or not) to insist upon strict compliance with any of these Custody Terms is not deemed to amount to the Custodian and/or PSL giving up or waiving any of any of their respective rights or remedies under them. The rights and remedies conferred on the Custodian and PSL will be cumulative and the exercise or waiver of any part of them will not stop or inhibit the exercising by the Custodian and/or PSL of any other additional rights and remedies.
SECTION 8: FEES AND CHARGES
The following fees and charges apply in connection with the provision of our services under these Terms.
0.34% per year (recurring annual charge), which is payable in respect of the appointment of the Custodian. This charge relates to the arrangement of safe custody of your assets; arranging investments; settlement and clearing; tax wrapper charges and bank charges. There is no VAT in respect of the Platform Charge.
Please be aware that your portfolio will bear the cost of the fees and charges payable to the underlying funds in respect of which investment has been made for your Account. Flying Colours invests in two ranges of fund, known as the “Core Portfolio Range” and the “Dynamic Portfolio Range”.
For our Core Portfolio Range, underlying fund charges have historically ranged from 0.10% to 0.18%. For example, an investment of £100,000 would historically have incurred underlying fund charges of £100 – £180 plus a platform charge of £340, resulting in a total annual charge of £440 – £520.
While the exact charge is subject to change due to portfolio holdings varying in proportion over time, we do not expect the underlying fund charges to vary significantly beyond this range. We will provide you with the exact fund charges attributable to your Account on request.
For our Dynamic Portfolio Range with active management, the fund charges are typically higher due to different fund selection criteria. Charges range from 0.3% to 0.5%.
For example, an investment of £100,000 would historically have incurred underlying fund charges of £300 – £500 plus a platform charge of £340, resulting in a total annual charge of £640 – £840.
We will provide you with the exact fund charges attributable to your Account on request.
As these charges are a percentage of the total portfolio investment, these will vary in line with any fluctuations in the find value. A full list of the underlying funds can be found on our website.
Investment payment methods
We encourage our clients to invest via bank transfers payable to the Custodian, wherever possible. We will provide you with detailed information on how to use this method of payment and the other methods by which you can invest under these Terms.
The Custodian can accept cheques for investment, but we are required to charge you a £25 administration fee which is passed on to the Custodian to cover its costs incurred with cashing your cheque.
SECTION 9: GLOSSARY
|Defined term||What does it mean?|
|Account||the account that we will open for you which, among other things, records the cash and investments held for you by the Custodian.|
|Application Form||the form you complete and submit to us in order to open your Account, which shall include, as applicable, your ISA application form and/or the SIPP Application Form.|
|Account Security Information||the information we will ask you to provide in order for us to confirm your identity.|
|Act||the Finance Act 2004.|
|Additional Allowance||(in the context of the Flying Colours ISA) a one-off additional permitted subscription allowance as further described under paragraph 4 of Section 2 of these Terms.|
|Additional Contribution Form||(in the context of the Flying Colours SIPP) the form your must complete and send to us if you wish to make additional contributions into the Scheme.|
|Advisory Agreement||the separate agreement you will have entered into with us in respect of our advisory services.|
|Agreement||these Terms and the other documents set out at paragraph 1.4 of Section 1, which constitute the Agreement between you and us.|
|Annual Allowance||the maximum amount of pension savings that can be made in any one tax year. Further details of this amount are set out at paragraph 4.13 of Section 3 of these Terms.|
|Best Execution Policy||the policy put in place to ensure compliance with the FCA Rules, which require firms to obtain the best possible results for their clients when executing client orders or passing them to other firms for execution (the “Best Execution Obligation”). Our Best Execution Policy is set out at Section 4 of these Terms.|
|Broker Review Procedure||the procedure for reviewing the Brokers, set out at Section 4 of these Terms.|
|Brokers||CIL and PSL.|
|CIL||Capital International Limited, a company incorporated in the Isle of Man and the provider of custody and settlement services to you. CIL’s registered office is at Capital House, Circular Road, Douglas, Isle of Man, IM1 1AG.|
|CINL||Capital International (Nominees) Limited a company incorporated in the Isle of Man whose registered office is at Capital House, Circular Road, Douglas, Isle of Man, IM1 1AG. CINL is a wholly owned subsidiary of Capital International Limited.|
|CIS||collective investment scheme.|
|client money||money a firm receives or holds on behalf of a client which it must treat in accordance with FCA Rules on client money.|
|Conflicts of Interest Policy||our policy on identifying and managing actual and potential conflicts of interest, set out in full at Section 6 of these Terms.|
|CREST||certificateless registry for electronic share transfer.|
|Custody Appointment Agreement||the agreement between us and the Custodian, under which we have appointed the Custodian to provide the Custody Services to you.|
|Custody Services||safe-custody and settlement services, to be provided by the Custodian in accordance with the Custody Terms.|
|Custody Terms||the terms in accordance with which the Custodian will provide its services to you, set out in full at Section 7 of these Terms.|
|Custodian||Capital International Limited (or CIL).|
|Platform Charge||the fees and charges detailed in Section 8 under the heading “Platform Charge”.|
|Custodian’s Conflict of Interest Policy||the Custodian’s policy on dealing with conflicts of interest, a summary of which can be made available on written request.|
|delegate||a person or entity to whom we may delegate the performance of certain functions or services (in accordance with the provisions contained at paragraph 23 of Section 1 of these Terms).|
|Eligible Custodians||the settlement and/or custody agents appointed by the Custodian (with our agreement) with whom your assets may be held.|
|Employer Contributions||contributions your employer makes to your Flying Colours SIPP. Further details of this are set out at paragraphs 4.19 – 4.22 of Section 3 of these Terms.|
|Enhanced Protection||a type of protection available against the reduction in the Lifetime Allowance.|
|ETF||exchange traded fund, a fund the units of which are traded on a stock exchange.|
|EUSTD||the European Union Directive on the Taxation of Savings Income.|
|Execution Factors||the factors that we require CIL to take into account when placing orders on your behalf, which are set out at Section 4 of these Terms.|
|Execution Venue||the counterparty or exchange with whom a transaction may be carried out on your behalf.|
|FATCA||the Foreign Accounts Tax Compliance Act, a piece of United States tax legislation.|
|FCA||the UK Financial Conduct Authority, or any successor in whole or in part to the functions thereof.|
|FCA Rules||the rules and guidance contained in the FCA’s handbook of rules and guidance.|
|Financial Plan||the financial plan we prepare for you in connection with our advisory services.|
|Fixed Protection||a type of protection available against the reduction in the Lifetime Allowance.|
|Flexi Access Drawdown||a means of drawing an income from your pension fund. There are no annual limits on withdrawals from a flexi-access drawdown fund.|
|Flying Colours||Flying Colours Finance Limited or “us, “our” and/or “we”. Flying Colours is authorised and regulated by the FCA and our registered office is at 2 Queen’s Court, Lyndhurst Road, Ascot, England SL5 9FE.|
|Flying Colours ISA||the Flying Colours Stocks and Shares ISA, in respect of which Flying Colours acts as the ISA manager.|
|Flying Colours SIPP||your SIPP with Flying Colours, which is established under the Scheme and operated by the SIPP Provider.|
|FOS||the Financial Ombudsman Service. This is the office to whom you may refer any complaint you have about the service we provide to you if we cannot resolve or settle your complaint (to your satisfaction) within 8 weeks of the date you first make the complaint.|
|FSCS||the Financial Services Compensation Scheme. This is a statutory compensation fund from which you may be able to make a claim in the event that a UK authorised financial services firm is unable (or likely to become unable) to pay a claim made against it.|
|HMRC||Her Majesty’s Revenue and Customs.|
|ISA||an individual savings account, which is a UK tax exempt savings scheme for individuals.|
|ISA Regulations||the Individual Savings Account Regulations 1998, the legislation governing ISAs.|
|ISA Terms||the terms set out at Section 2 of these Terms which set out the terms and conditions which will apply to you if you have chosen to invest in a Flying Colours ISA.|
|ISA Key Facts Document||a document we will provide to you setting out the key facts in respect of your Flying Colours ISA.|
|Lifetime Allowance||(in the context of the Flying Colours SIPP) the limit on the amount of tax efficient pension savings that can be built up in a registered pension scheme (such as the Scheme).|
|Member Contributions||(in the context of the Flying Colours SIPP) cash contributions from you into the Scheme.|
|MPAA||(in the context of the Flying Colours SIPP) money purchase annual allowance.|
|OTC||over the counter trading, which is trading that takes place as between two parties and not on an investment exchange.|
|Pension Commencement Lump Sum||(in the context of the Flying Colours SIPP) a tax-free lump sum you are able to take from your pension when it starts.|
|Pension Input Period||the period of time used to measure the amount of contributions paid by you into your pension arrangements. In respect of your Flying Colours SIPP, the first pension input period will end on the following 5th April following the first contribution.|
|Pension Regulations||the Act and/or any other applicable subordinate legislation and any other current or future legislation which affects registered pension schemes.|
|Personal Account Dealing Policy||a policy maintained by us pursuant to which all investments must be placed in order to minimise conflicts between us and our clients.|
|Pershing Nominees Limited||Pershing Nominees Limited, PSL’s nominee company. Pershing Nominees Limited’s registered office is at Capstan House, One Clove Crescent, East India Dock, London E14 2BH.|
|PSL||Pershing Securities Limited, a Broker which the Custodian uses in the event that your Account includes investments which are listed on a Recognised Investment Exchange and settled through a Recognised Clearing House. PSL’s registered office is at Capstan House, One Clove Crescent, East India Dock, London E14 2BH.|
|Recognised Clearing House||has the meaning given to it in the FCA Rules. In summary it is a clearing house (where transactions may be cleared) which is declared by the Bank of England to be a recognised clearing house.|
|Recognised Investment Exchange||has the meaning given to it in the FCA Rules. In summary it is an investment exchange which is declared to be a recognised investment exchange.|
|Record Retention Statement||the statement set out at paragraph 11 of the Custody Terms.|
|Relevant Law||FATCA and any existing or future FATCA-like regimes, including, without limitation, the OECD Common Reporting Standard, any related intergovernmental agreement between the United Kingdom and the United States, or the United Kingdom and any other jurisdiction(s), in connection with such regimes and any regulations, official interpretations, guidance or implementing agreements relating to the foregoing (in each case as enacted, made, amended or replaced from time to time).|
|Relevant UK Individual||you will be a ‘relevant UK individual’ if you:
(1) have relevant UK earnings chargeable to income tax in the current tax year; or
(i) are resident in the UK at some time during the current tax year; or
(ii) were resident in the UK at some time during the 5 tax years immediately before the current tax year and also resident in the UK at the time of joining the Scheme; or
(3) have, or are the spouse of a person who has, for the current tax year general earnings from overseas Crown employment subject to UK tax.
|Risk Profile||in respect of our discretionary management service, a risk profile which has an investment strategy intended to reflect a desired attitude to risk, investment time horizon, volatility and asset allocation (of which there are five in total).|
|Rulebook||the Isle of Man Financial Services Act 2008 Financial Services Rulebook. The Rulebook is separate and distinct from the FCA Rules.|
|Rules||(in the context of the Flying Colours SIPP) the rules (as amended from time to time) which, in addition to the Trust Deed, governs the Scheme.|
|Scheme||(in the context of the Flying Colours SIPP) the Liberty SIPP, a registered pension scheme for the purposes of Part IV of the Act and which is governed by the Trust Deed and the Rules.|
|Segment||a segment within your Flying Colours SIPP, of which there are 1,000 separate segments. These will be held in one or more Arrangements (see SIPP Arrangement above).|
|services||the services we will provide to you, in accordance with the Agreement, which are set out at paragraph 2 of Section 1 of these Terms.|
|SIPP||a self-invested personal pension.|
|SIPP Application Form||the application form you must complete in order to open a Flying Colours SIPP.|
|SIPP Arrangement or Arrangement||this is how your Flying Colours SIPP is made up and contains up to 1,000 Segments. For further details please see paragraph 1.4 of Section 3 of these Terms.|
|SIPP Key Facts Document||a document we will provide to you setting out the key facts in respect of your Flying Colours SIPP.|
|SIPP Provider||Liberty SIPP Limited; the establisher, operator and administrator of the Scheme (including your SIPP). The SIPP Provider’s registered office is at The Exchange, Bank Street, Bury, Lancashire, BL9 0DN.|
|SIPP Terms||the terms which apply to the operation of your Flying Colours SIPP, set out in full at Section 3 of these Terms.|
|Terms||these terms and conditions.|
|ISA Transfer Form||the form (which may form part of your Application Form, as applicable) you should complete in order to transfer your existing ISA to Flying Colours, or to transfer your Flying Colours ISA to another ISA manager.|
|Trust Deed||(in the context of the Flying Colours SIPP) the trust deed (as amended from time to time) which, in addition to the Rules, governs the Scheme.|
|Trustee||(in the context of the Flying Colours SIPP) Liberty Trustees Limited, the trustee of the Scheme. The Trustee’s registered office is at The Exchange, Bank Street, Bury, Lancashire, BL9 0DN.|
|VAT||Value Added Tax (or any successor or replacement tax thereof).|
|Website||www.flyingcolourswealth.com (or such other website address we communicate to you).|
Last updated: 28/11/2017