NS&I - Income bonds

1. This agreement applies to National Savings and Investments (formerly known as National Savings) Income Bonds (“Bonds”), and these terms and conditions have been set pursuant to section 12 of the National Loans Act 1968. These terms and conditions set out the obligations we have to you, as a customer, and the obligations you have to us. Please read these carefully and keep for reference.

2. Bonds are a UK Government security subject to the National Savings Stock Register Regulations 1976 (Statutory Instrument Number: 1976/2012) as amended or re-enacted from time to time (see paragraph 86). In the event of any differences between these terms and conditions and the Regulations, the Regulations will prevail.

Definitions
3. In these terms and conditions:
(a) “BACS” means the Bankers Automated Clearing Service;
(b) “banking day” means a day (other than a Saturday, Sunday or bank holiday) on which banks are generally open for business in London, and, in relation to the processing of a payment, any other place of receipt;
(c) “Director” means the Director of Savings;
(d) “holding” means any holding of Bonds (including a single Bond);
(e) “NS&I” means National Savings and Investments;
(f) “post office” means a branch of Post Office Ltd in the UK (this does not include post offices in the Channel Islands and the Isle of Man).

Interest
4. Bonds earn interest at a variable rate set by the Treasury  (“the Treasury rate”).

5. For each day on which a holding under the same Customer Number (previously called Register Number) has a total capital value of at least £25,000 it will earn interest at a variable higher rate also set by the Treasury (“the bonus rate”).

6. The Treasury may change the Treasury rate, change or withdraw the bonus rate, and change the qualifying capital value for the bonus rate, upon giving notice in accordance with paragraphs 68 and 69.

7. The current rate(s) and the balances required to earn them, if applicable, and notice of changes will be available:

• on the NS&I website;

• in our Interest Rates leaflet available at post offices and from us;

• in the London, Edinburgh and Belfast Gazettes (the Gazettes); and

• directly from us over the phone.

8. The Treasury may change the interest rate(s) which apply to your holding from time to time. This may be for any of the following reasons:
(a) to enable us to respond proportionately to a change in the Bank of England’s base rate or any other publicly listed market rate;
(b) to enable us to respond proportionately to changes in the interest rates paid or charged by other banks and financial institutions;
(c) to reflect changes in the costs we reasonably incur in providing your account;
(d) to reflect changes in the law or a decision by an ombudsman;
(e) to enable us to meet changed regulatory requirements;
(f)  to reflect changes in any codes of practice to which we subscribe; or
(g) for any other reason that the Treasury considers necessary.

9. We will give you a reasonable period of personal notice if the Treasury make a material change to the applicable interest rate(s) which is to your disadvantage. Whether the change is material will be determined by reference to the size of the balance of your holding and the extent of the change to the interest rate(s).

10. Interest is paid monthly in arrears and is earned on a daily basis at 1/365 of the annual interest rate for each day a Bond is held (or 1/366 for each day in a calendar leap year). This includes the day on which the Bond is purchased (see paragraph 30) but not the day the Bond is cashed in.

11. Subject to paragraph 13, interest is paid on the 5th day of each month (“an interest payment date”). If that day falls on a day which is not a banking day your account may not be credited until the next banking day.

12. If we receive an application to invest on or after the 10th of any month it may not be possible to make the first interest payment on the 5th day of the following month. In this case we will pay all the interest your holding has earned from the date of investment (see paragraph 30) on the next interest payment date.

13. The Treasury may from time to time change the intervals at which interest is paid, and the day of the month on which it is paid (see paragraph 11), upon giving notice in accordance with paragraph 68 and 69. In doing this, the Treasury may specify holding limits above or below which any change will apply. No such change will apply to any existing holding unless you agree.

14. Interest will be paid by direct credit to a UK bank account (including a National Savings Investment Account, Easy Access Savings Account or Direct Saver) or building society account. The Director intends to use BACS for this purpose so the account you nominate on your application must be capable of receiving payment by this method.

15. If you already have a holding on which interest is paid by warrant, you may have interest on any Bond held under these terms and conditions paid in the same way.

16. Only one account or method of payment can be nominated for each holding. You may change the method of payment of interest but may only choose payment by warrant if you are holding a Bond issued under terms and conditions which provide for payment by warrant (dated before 1 January 1990).

Tax
17. Interest will be paid without deduction of tax. However it is subject to UK Income Tax so Bond holders may need to declare their interest to HM Revenue & Customs, depending on their circumstances.

Who may purchase and hold Bonds
18. Individuals Individuals of at least 7 years old may purchase and hold Bonds:
(a) in their own name; or
(b) jointly with one other individual.
An individual may hold more than one Bond in either or both of these capacities.

19. Children Children under 7 years of age cannot purchase Bonds. Bonds may be purchased for a child under 7 years of age to be held in the name of, and as the property of, the child. Bonds may similarly be purchased for two such children to be held in their names jointly.

20. Trustees Bonds may be purchased and held in trust by yourself or jointly with one or more other trustees. Corporate trustees may also purchase and hold Bonds. The trust may have up to two beneficiaries who must be individuals (but a beneficiary whose interest only takes effect on the death of another beneficiary is disregarded for the purpose of this limit).

21. Deputies Bonds may be purchased on behalf of, and in the name of, a person who lacks capacity, by a person who is legally entitled to make investments on their behalf.

22. Others A body, whether it is incorporated (like a company) or is  unincorporated (like a members’ association) may invest in a Bond only if it already holds a Bond not issued under these terms and conditions.The new Bond will be held in the same name (and in the case of a trust, for the same beneficiaries under the same trust) as the Bond already held.

23. General Bonds may not be purchased by a person on their own behalf if they are under a legal disability subject to paragraphs 18 to 22 inclusive.

How to purchase Bonds
24. An application to purchase Bonds can be made:
(a)    via the internet;
(b)    by telephone; or
(c)    by post to NS&I.

25. Only personal applications can be made via the internet and by telephone.

26. Where an applicant applies by telephone or via the internet, the Bonds must be purchased using a debit card in the name of the proposed Bond holder issued by a UK bank or building society. This means that Bonds can only be purchased by telephone or via the internet where the applicant is able and authorised to use a debit card in the name of the proposed Bond holder (and not, for example, where a parent applies to purchase Bonds on behalf of a child).

27. Where an applicant makes an application via the internet or by telephone and this is the first application, the applicant must confirm the application by signing and returning a confirmation form we will send to them by post. The form will specify the time within which the signed form must be returned to us. If the form is not received by us within the specified time we will not be able to process the application. If this is the case any money paid to us will be refunded to the relevant debit card or by issuing a crossed warrant (like a cheque). However, we reserve the right to use a different method of payment if necessary. No interest will be earned or paid.

28. When an application is made by post the Bond must be purchased using a cheque drawn on a UK bank or building society account held by the proposed Bond holder, or applicant where different, or by a building society branch cheque or banker’s draft.

29. In all cases, an application to purchase is subject to acceptance by us.

30. Once an application is accepted, the date of purchase of Bonds will be:
(a) for applications sent by post, the date the application and payment were received at NS&I. No responsibility will be accepted for applications which are lost in the post, or affected by postal delays. Proof of posting will not be accepted as proof of delivery;
(b) for applications via the internet, the date that NS&I received the online application and authority for a debit card payment in the name of the applicant, subject to authorisation of the debit card payment from the card issuer;
(c) for applications made by telephone, the date that NS&I took the details of the application and authority for a debit card payment in the name of the applicant, subject to authorisation of the debit card payment from the card issuer. Where a telephone application takes place over two dates in one continuous call, ie beginning before midnight and ending after midnight, the date that NS&I took the details of the application and authority for a debit card payment in the applicant’s name will be the date that the call began.

31. Once an application has been accepted, the Bond holder will receive a certificate of investment showing the amount and date of purchase.

32. You can only hold more than one Bond under the same Customer Number if they are held in the same name or, if a joint holding, the same names (and in the case of a trust, for the same beneficiaries under the same trust).

33. For any additional investment in a holding to be registered under an existing Customer Number, the Customer Number should be quoted when making the application.

34. If an applicant holds Bonds under different Customer Numbers and wants the holding to have one Customer Number, they should apply for a transfer under paragraph 64.

35. The date on which a holding under different Customer Numbers is deemed to have one Customer Number will normally be the first interest payment date after the transfer application has been received.

36. The responsibility for ensuring that Bonds are held under the same Customer Number rests with the Bond holder.

Evidence of identity
37. Under Money Laundering Regulations we are required to verify the identity and address of our customers before we can accept an application to invest. To do this we may make electronic checks using data from a third party including information from the Electoral Register. In accepting the terms and conditions the applicant confirms that they, and anyone else named on the application, are aware that their identity and address will be checked.

38. We may also request documentary evidence of identity and address. The request for evidence of identity will specify the time within which the evidence must be returned to us. If the evidence is not received by us within the specified time we will not be able to process the application. No responsibility will be accepted for documents which are lost in the post, or affected by postal delays. Proof of posting will not be accepted as proof of delivery.

39. If we are unable to process an application due to lack of evidence of identity, the application will be cancelled from inception and any money paid to us will be refunded to the relevant debit card or by issuing a crossed warrant (like a cheque) to the purchaser named on the application form. However, we reserve the right to use another method for payment if necessary. No interest will be earned or paid.

Cooling off
40. If an applicant is not happy with their purchase of a Bond they have 14 days from the date the confirmation of purchase was received within which to cancel the Bond. To cancel the Bond the applicant must notify us in writing, by post, by fax, by email or by telephone, using the details at the end of these terms and conditions.

41. If an applicant cancels their Bond we will return all of the money to them. No interest will be earned or paid for this period. If an applicant does not cancel their Bond, these terms and conditions will apply until the Bond is repaid.

Purchase and holding limits
42. The minimum for each purchase is £500.

43. The minimum holding of Bonds (in particular after any partial encashment) is £500.

44. An applicant may apply to purchase Bonds of any value subject to paragraph 42 and the maximum holding limit in paragraph 45.

45. An applicant may not apply to purchase Bonds if immediately after that purchase the holder would hold, in the same legal capacity, either solely or jointly with any other person, more than £1,000,000 in Bonds.

46. Where Bonds are held in the joint names of two persons, the total value of the Bonds will count towards the holding limit of both of the joint holders, except that Bonds held in the joint names of a trustee and beneficiary will not count towards the beneficiary’s own holding limit.

47. Bonds held by someone as a trustee will not affect the amount they may hold beneficially, nor will Bonds held in trust for a beneficiary count towards the maximum limit of that beneficiary’s holding in his own name.

48. The maximum holding limit applies to trust holdings but each trust is treated separately.

49. Bonds you inherit from a deceased holder will not count towards the maximum limit.

Cashing in
50. Bonds may be cashed in at any time in accordance with paragraphs 51 to 53 inclusive.

51. Bonds purchased by cheque or debit card can only be cashed in after payment has cleared. However, in certain circumstances, we may allow Bonds purchased by debit card to be encashed before the payment has cleared. If so allowed, we will repay the sum requested to the debit card from which the payment was made. It will normally take seven banking days from the date of purchase for payments to clear. For example, if we receive a cheque on a Monday, the payment will be cleared on the Tuesday of the following week. One additional day should be allowed for each English bank holiday. The same clearance periods apply for debit card payments.

52. Bonds can be cashed in by completing the form on the back of the certificate of investment and sending it to NS&I. In the event that an interest payment cannot be prevented from being made after the last date on which interest is earned, the amount of any overpayment will be deducted from the amount to be cashed in.

53. The capital value of a Bond to be cashed in will earn interest due under paragraphs 4 to 10 (inclusive) from the date of purchase (see paragraph 30) up to but not including the date it is cashed in. Any interest earned but not yet paid will be added to the capital to be cashed in.

54. Partial encashments Part of a holding may be cashed in in accordance with paragraphs 51 to 53. The minimum amount that can be cashed in is £500 and at least £500 must remain invested in Bonds (see paragraph 43).

Payments by electronic transfer
55. Payment will normally be made by electronic transfer to a UK bank account (including a National Savings Bank Investment Account, Easy Access Savings Account or Direct Saver) or a building society account.

56. We intend to use BACS as the means of making these electronic transfers (although we reserve the right to use a different means if necessary).

57. For the purpose of determining the amount payable, the date a Bond, or part of a Bond, is cashed in will be taken to be the date on which, in the normal course, the requested amount would be credited to the nominated account following initiation of the electronic transfer by us. In the case of BACS, this is normally two banking days after the electronic transfer is initiated.

58. Where an electronic transfer is initiated properly we will not be liable for:
(a) any failure or delay of the receiving bank or building society in crediting the specified account; or
(b) any failure or delay in any part of the electronic process which is beyond our direct control;
including any failure which occurs because the specified account is incapable of receiving an electronic transfer.

Payments by crossed warrant
59. In exceptional circumstances payment can, on request, be made by crossed warrant (like a cheque). In such cases the date a Bond, or part of a Bond, is cashed in, will be taken to be the date on the warrant.

Children
60. Interest on a Bond held in the name of a child under 7 years of age, or by two such children jointly, will be paid into a bank account (including a National Savings Investment Account, Easy Access Savings Account or Direct Saver) or building society account in the name of the child (or children) or in the name of a person who satisfies us that he or she is a proper person to receive payment. This will normally be the person with parental responsibility for the child(ren).

61. We will repay a Bond held in the name of a child(ren) under 7 years of age to any person (on their instructions) who satisfies us that he or she is a proper person to receive payment. Normally that is the person with parental responsibility for the child(ren).
       
62. Once a child has reached the age of 7 years, repayment will normally only be made to the child, on his or her instructions.

Joint investments
63. Where Bonds are held jointly by two or more holders:
(a) the Bonds will be the joint property of all holders;
(b) to give any instructions relating to the Bond all holders need to sign;
(c) in the event of the death of a joint Bond holder, full ownership will pass to the survivor who will be entitled to operate the Bond on the same terms;
(d) if a Bond holder tells us of a dispute, we may freeze the Bond until we receive written instructions from the holders. At the request of any holder we may suspend interest payments to the account  nominated on the application to invest. However the Bond will continue to earn interest.

Transfer
64. You can only transfer Bonds to someone else, or from one Customer Number to another, with our consent. We will, for example, normally give consent in the case of the inheritance of Bonds on the death of a holder, or to a transfer to benefit from bonus interest. We will not normally consent to any transfer which is by way of sale. But the minimum and maximum holding limits applicable under paragraphs 43 and 45 to 49 apply to the holdings of the transferor and transferee.

Guaranteed life of Bonds and redemption by the Treasury
65. Bonds may be held for 10 years from the date of purchase (see paragraph 30) free of any power of redemption. On giving six months’ notice, in accordance with paragraphs 68 and 69, the Treasury may redeem the holding on any interest payment date after this 10 year period.

66. Interest will continue to be paid under these terms and conditions until the redemption date.

67. We will write to you before redemption, at your last recorded address, to tell you the redemption date.

Notice by the Treasury
68. The Treasury will give any notice required under paragraphs 6, 13 and 65 of these terms and conditions in the London, Edinburgh and Belfast Gazettes or in any other manner which they think fit.

69. If notice is given otherwise than in the Gazettes it will be recorded in them, as soon as is reasonably possible.

Repayment of Bonds by NS&I
70. We can repay Bonds immediately, without needing an application for repayment, if:
(a) we reasonably think any of the persons named in the application have provided false information;
(b) we reasonably suspect that the Bonds are being held for an illegal purpose;
(c) the applicant was not entitled to purchase the Bond, or the Bond holder is not entitled to hold the Bond;
(d) the Bond holder’s holding exceeds the maximum allowable (see paragraph 45);
(e) the Bond holder fails to comply, in a material manner, with the terms or conditions for holding the Bond; or
(f) we have any other valid reason to do so.

Liability
71. If you tell us that a repayment from your holding was not authorised by you, we will carry out an investigation. As soon as we are reasonably satisfied that you did not authorise the repayment, we will, subject to paragraph 72, refund the amount repaid and will return your holding to the position it would have been in if the unauthorised repayment had not taken place. This means that, in addition to the amount of the unauthorised repayment, we will pay any interest on the amount incorrectly paid but we will have no further liability.

72. However, you will be liable for all repayments made from your holding if you have acted fraudulently.

73. If you ask us to make a repayment by electronic transfer and, after a reasonable period has elapsed, the bank or building society to which payment should have been made says that it did not receive the payment, we will refund the amount of the payment and return your holding to the position it would have been in if the payment had not been made, except in the following cases:
(a) there was a mistake in any of the details contained in the repayment instructions you gave us. If this is the case, we will make reasonable efforts to recover the funds;
(b) we can show that the payment was in fact received by the bank or building society to which payment should have been made.

How we use your information
74. We may use any information provided to us to help us:
(a) manage Bonds;
(b) prevent and detect crime;
(c) understand our customers’ requirements; and
(d) develop and test products and services.
It is important that we are advised of any change in details.

75. We treat all the information we hold concerning customers as private and confidential. We will not reveal any personal details or details concerning a customer’s investments to anyone not connected to NS&I, unless:
(a) the customer asks us to reveal the information or we have the customer’s permission to do so;
(b) we are required or permitted to do so by law;
(c) it is required by credit reference and fraud prevention agencies and other companies that provide a service to us or the customer; or
(d) there is a duty to the public to reveal the information.

76. If you are a joint applicant we will pass your information to the other joint applicant(s). When giving us information about another person, you confirm that they have appointed you to act on their behalf. This includes providing consent to process their data as set out in these terms and conditions.

77. We may monitor or record telephone calls for training, quality assurance and other business purposes.

78. From time to time we may change the way we use customer information. Where we believe that customers may not reasonably expect such a change we will notify them personally. If customers do not object to the change within 60 days, we will deem them to have consented to that change.

79. Your information will be held by us in both paper form and on our IT systems and will be kept after the holding is closed in line with our retention procedures. If you would like a copy of the information we hold about you, please make a Data Subject Access Request under the Data Protection Act and send it to: The Data Protection Officer, National Savings and Investments, 1 Drummond Gate, London SW1V 2QX - make sure your request is signed. You can print off and complete the form available in the 'Privacy' section of the NS&I website or write to the Data Protection Officer giving us your full name, current address and any previous addresses, which savings or investments you have with us and the account, holder's or customer numbers. There may be a small charge for this service - if so, we will let you know.

80. We would like to keep customers up to date with information about our products and services which we think might interest them. If a customer does not want to receive this information they can contact us using the details at the end of these terms and conditions.

How to notify us of changes to personal details
81. To enable us to manage your holding effectively and to be able to contact you when necessary we ask that you let us know, as soon as possible, of any changes to your name, address, telephone number or email address. Please use details below to notify us of any such changes.

Complaints
82. If we make a mistake we’ll aim to put things right quickly and without fuss, and we have a procedure designed to resolve complaints effectively and fairly. Complaints can be made in writing to the Customer Service Team at the address at the end of these terms and conditions, by calling us free on 0800 092 1286 (calls from mobiles may not be free), or by visiting nsandi.com, clicking ‘Contact us’, clicking on the ‘Contact us online’ button in the ‘Email us’ section, and selecting ‘complaint’ in the ‘subject’ dropdown menu. A leaflet describing our complaints procedure is available on request or you can download one at nsandi.com, clicking ‘Why save with us’, clicking on ‘Our commitment’ and then clicking on the link under the heading ‘Not happy with our service?’.

83. If a customer feels that we have not resolved their complaint to their satisfaction, they may be able to refer it to the Financial Ombudsman Service (FOS) at South Quay Plaza, 183 Marsh Wall, London E14 9SR (Tel 0800 023 4567). The FOS is an organisation set up by law to give consumers a free and independent service for resolving disputes.

Changes to these terms and conditions
84. The Treasury reserves the right to amend these terms and conditions at any time. If the change is to the Bond holder’s detriment we will let them know personally at least 30 days before the change. If this is the case you can switch to another NS&I product or cash in your Bonds without notice or penalty within 60 days of us telling you.

85. For any other changes we will let customers know by updating our website and, if appropriate, in a range of national newspapers.

Regulations
86.    As at 1 August 2011, The National Savings Stock Register Regulations 1976 (Statutory Instrument Number 1976/2012) have been amended by the following Statutory Instruments:

87. Copies of UK legislation can be purchased from the TSO Parliamentary and Legal Bookshop.

Law and jurisdiction
88. These terms and conditions and any agreement made on the basis of them will be governed by and interpreted in accordance with English law and available in the English and Welsh languages.

89. In the event of the death of a Bond holder, the Director reserves the right to make any payment in respect of the Bond in accordance with the law of the place in which the Bond holder resided, or if different, was domiciled at the date of their death.

90. Subject to paragraphs 91 and 92, the courts of England are to have exclusive jurisdiction to settle any dispute (including claims for set off and counterclaims) which may arise in connection with these terms and conditions or any agreement made on the basis of them and which, subject to the Regulations, falls to be determined by a court of law.

91. Where section 16 of the Civil Jurisdiction and Judgments Act 1982 applies the relevant court of law of the relevant part of the United Kingdom shall have jurisdiction to settle any such dispute.

92. Paragraphs 90 and 91 are included for the benefit of NS&I. Accordingly NS&I retains the right to bring proceedings in any other court which has jurisdiction to whose jurisdiction the holder irrevocably submits.

Income Bonds
National Savings and Investments
GLASGOW
G58 1SB
Telephone 0500 007 007
Fax 0141 636 8744

1 August 2011

PLEASE KEEP FOR REFERENCE

1. This agreement applies to National Savings and Investments (formerly known as National Savings) Income Bonds (“Bonds”), and these terms and conditions have been set pursuant to section 12 of the National Loans Act 1968. These terms and conditions set out the obligations we have to you, as a customer, and the obligations you have to us. Please read these carefully and keep for reference.

2. Bonds are a UK Government security subject to the National Savings Stock Register Regulations 1976 (Statutory Instrument Number: 1976/2012) as amended or re-enacted from time to time (see paragraph 86). In the event of any differences between these terms and conditions and the Regulations, the Regulations will prevail.

Definitions
3. In these terms and conditions:
(a) “BACS” means the Bankers Automated Clearing Service;
(b) “banking day” means a day (other than a Saturday, Sunday or bank holiday) on which banks are generally open for business in London, and, in relation to the processing of a payment, any other place of receipt;
(c) “Director” means the Director of Savings;
(d) “holding” means any holding of Bonds (including a single Bond);
(e) “NS&I” means National Savings and Investments;
(f) “post office” means a branch of Post Office Ltd in the UK (this does not include post offices in the Channel Islands and the Isle of Man).

Interest
4. Bonds earn interest at a variable rate set by the Treasury  (“the Treasury rate”).

5. For each day on which a holding under the same Customer Number (previously called Register Number) has a total capital value of at least £25,000 it will earn interest at a variable higher rate also set by the Treasury (“the bonus rate”).

6. The Treasury may change the Treasury rate, change or withdraw the bonus rate, and change the qualifying capital value for the bonus rate, upon giving notice in accordance with paragraphs 68 and 69.

7. The current rate(s) and the balances required to earn them, if applicable, and notice of changes will be available:

• on the NS&I website;

• in our Interest Rates leaflet available at post offices and from us;

• in the London, Edinburgh and Belfast Gazettes (the Gazettes); and

• directly from us over the phone.

8. The Treasury may change the interest rate(s) which apply to your holding from time to time. This may be for any of the following reasons:
(a) to enable us to respond proportionately to a change in the Bank of England’s base rate or any other publicly listed market rate;
(b) to enable us to respond proportionately to changes in the interest rates paid or charged by other banks and financial institutions;
(c) to reflect changes in the costs we reasonably incur in providing your account;
(d) to reflect changes in the law or a decision by an ombudsman;
(e) to enable us to meet changed regulatory requirements;
(f)  to reflect changes in any codes of practice to which we subscribe; or
(g) for any other reason that the Treasury considers necessary.

9. We will give you a reasonable period of personal notice if the Treasury make a material change to the applicable interest rate(s) which is to your disadvantage. Whether the change is material will be determined by reference to the size of the balance of your holding and the extent of the change to the interest rate(s).

10. Interest is paid monthly in arrears and is earned on a daily basis at 1/365 of the annual interest rate for each day a Bond is held (or 1/366 for each day in a calendar leap year). This includes the day on which the Bond is purchased (see paragraph 30) but not the day the Bond is cashed in.

11. Subject to paragraph 13, interest is paid on the 5th day of each month (“an interest payment date”). If that day falls on a day which is not a banking day your account may not be credited until the next banking day.

12. If we receive an application to invest on or after the 10th of any month it may not be possible to make the first interest payment on the 5th day of the following month. In this case we will pay all the interest your holding has earned from the date of investment (see paragraph 30) on the next interest payment date.

13. The Treasury may from time to time change the intervals at which interest is paid, and the day of the month on which it is paid (see paragraph 11), upon giving notice in accordance with paragraph 68 and 69. In doing this, the Treasury may specify holding limits above or below which any change will apply. No such change will apply to any existing holding unless you agree.

14. Interest will be paid by direct credit to a UK bank account (including a National Savings Investment Account, Easy Access Savings Account or Direct Saver) or building society account. The Director intends to use BACS for this purpose so the account you nominate on your application must be capable of receiving payment by this method.

15. If you already have a holding on which interest is paid by warrant, you may have interest on any Bond held under these terms and conditions paid in the same way.

16. Only one account or method of payment can be nominated for each holding. You may change the method of payment of interest but may only choose payment by warrant if you are holding a Bond issued under terms and conditions which provide for payment by warrant (dated before 1 January 1990).

Tax
17. Interest will be paid without deduction of tax. However it is subject to UK Income Tax so Bond holders may need to declare their interest to HM Revenue & Customs, depending on their circumstances.

Who may purchase and hold Bonds
18. Individuals Individuals of at least 7 years old may purchase and hold Bonds:
(a) in their own name; or
(b) jointly with one other individual.
An individual may hold more than one Bond in either or both of these capacities.

19. Children Children under 7 years of age cannot purchase Bonds. Bonds may be purchased for a child under 7 years of age to be held in the name of, and as the property of, the child. Bonds may similarly be purchased for two such children to be held in their names jointly.

20. Trustees Bonds may be purchased and held in trust by yourself or jointly with one or more other trustees. Corporate trustees may also purchase and hold Bonds. The trust may have up to two beneficiaries who must be individuals (but a beneficiary whose interest only takes effect on the death of another beneficiary is disregarded for the purpose of this limit).

21. Deputies Bonds may be purchased on behalf of, and in the name of, a person who lacks capacity, by a person who is legally entitled to make investments on their behalf.

22. Others A body, whether it is incorporated (like a company) or is  unincorporated (like a members’ association) may invest in a Bond only if it already holds a Bond not issued under these terms and conditions.The new Bond will be held in the same name (and in the case of a trust, for the same beneficiaries under the same trust) as the Bond already held.

23. General Bonds may not be purchased by a person on their own behalf if they are under a legal disability subject to paragraphs 18 to 22 inclusive.

How to purchase Bonds
24. An application to purchase Bonds can be made:
(a)    via the internet;
(b)    by telephone; or
(c)    by post to NS&I.

25. Only personal applications can be made via the internet and by telephone.

26. Where an applicant applies by telephone or via the internet, the Bonds must be purchased using a debit card in the name of the proposed Bond holder issued by a UK bank or building society. This means that Bonds can only be purchased by telephone or via the internet where the applicant is able and authorised to use a debit card in the name of the proposed Bond holder (and not, for example, where a parent applies to purchase Bonds on behalf of a child).

27. Where an applicant makes an application via the internet or by telephone and this is the first application, the applicant must confirm the application by signing and returning a confirmation form we will send to them by post. The form will specify the time within which the signed form must be returned to us. If the form is not received by us within the specified time we will not be able to process the application. If this is the case any money paid to us will be refunded to the relevant debit card or by issuing a crossed warrant (like a cheque). However, we reserve the right to use a different method of payment if necessary. No interest will be earned or paid.

28. When an application is made by post the Bond must be purchased using a cheque drawn on a UK bank or building society account held by the proposed Bond holder, or applicant where different, or by a building society branch cheque or banker’s draft.

29. In all cases, an application to purchase is subject to acceptance by us.

30. Once an application is accepted, the date of purchase of Bonds will be:
(a) for applications sent by post, the date the application and payment were received at NS&I. No responsibility will be accepted for applications which are lost in the post, or affected by postal delays. Proof of posting will not be accepted as proof of delivery;
(b) for applications via the internet, the date that NS&I received the online application and authority for a debit card payment in the name of the applicant, subject to authorisation of the debit card payment from the card issuer;
(c) for applications made by telephone, the date that NS&I took the details of the application and authority for a debit card payment in the name of the applicant, subject to authorisation of the debit card payment from the card issuer. Where a telephone application takes place over two dates in one continuous call, ie beginning before midnight and ending after midnight, the date that NS&I took the details of the application and authority for a debit card payment in the applicant’s name will be the date that the call began.

31. Once an application has been accepted, the Bond holder will receive a certificate of investment showing the amount and date of purchase.

32. You can only hold more than one Bond under the same Customer Number if they are held in the same name or, if a joint holding, the same names (and in the case of a trust, for the same beneficiaries under the same trust).

33. For any additional investment in a holding to be registered under an existing Customer Number, the Customer Number should be quoted when making the application.

34. If an applicant holds Bonds under different Customer Numbers and wants the holding to have one Customer Number, they should apply for a transfer under paragraph 64.

35. The date on which a holding under different Customer Numbers is deemed to have one Customer Number will normally be the first interest payment date after the transfer application has been received.

36. The responsibility for ensuring that Bonds are held under the same Customer Number rests with the Bond holder.

Evidence of identity
37. Under Money Laundering Regulations we are required to verify the identity and address of our customers before we can accept an application to invest. To do this we may make electronic checks using data from a third party including information from the Electoral Register. In accepting the terms and conditions the applicant confirms that they, and anyone else named on the application, are aware that their identity and address will be checked.

38. We may also request documentary evidence of identity and address. The request for evidence of identity will specify the time within which the evidence must be returned to us. If the evidence is not received by us within the specified time we will not be able to process the application. No responsibility will be accepted for documents which are lost in the post, or affected by postal delays. Proof of posting will not be accepted as proof of delivery.

39. If we are unable to process an application due to lack of evidence of identity, the application will be cancelled from inception and any money paid to us will be refunded to the relevant debit card or by issuing a crossed warrant (like a cheque) to the purchaser named on the application form. However, we reserve the right to use another method for payment if necessary. No interest will be earned or paid.

Cooling off
40. If an applicant is not happy with their purchase of a Bond they have 14 days from the date the confirmation of purchase was received within which to cancel the Bond. To cancel the Bond the applicant must notify us in writing, by post, by fax, by email or by telephone, using the details at the end of these terms and conditions.

41. If an applicant cancels their Bond we will return all of the money to them. No interest will be earned or paid for this period. If an applicant does not cancel their Bond, these terms and conditions will apply until the Bond is repaid.

Purchase and holding limits
42. The minimum for each purchase is £500.

43. The minimum holding of Bonds (in particular after any partial encashment) is £500.

44. An applicant may apply to purchase Bonds of any value subject to paragraph 42 and the maximum holding limit in paragraph 45.

45. An applicant may not apply to purchase Bonds if immediately after that purchase the holder would hold, in the same legal capacity, either solely or jointly with any other person, more than £1,000,000 in Bonds.

46. Where Bonds are held in the joint names of two persons, the total value of the Bonds will count towards the holding limit of both of the joint holders, except that Bonds held in the joint names of a trustee and beneficiary will not count towards the beneficiary’s own holding limit.

47. Bonds held by someone as a trustee will not affect the amount they may hold beneficially, nor will Bonds held in trust for a beneficiary count towards the maximum limit of that beneficiary’s holding in his own name.

48. The maximum holding limit applies to trust holdings but each trust is treated separately.

49. Bonds you inherit from a deceased holder will not count towards the maximum limit.

Cashing in
50. Bonds may be cashed in at any time in accordance with paragraphs 51 to 53 inclusive.

51. Bonds purchased by cheque or debit card can only be cashed in after payment has cleared. However, in certain circumstances, we may allow Bonds purchased by debit card to be encashed before the payment has cleared. If so allowed, we will repay the sum requested to the debit card from which the payment was made. It will normally take seven banking days from the date of purchase for payments to clear. For example, if we receive a cheque on a Monday, the payment will be cleared on the Tuesday of the following week. One additional day should be allowed for each English bank holiday. The same clearance periods apply for debit card payments.

52. Bonds can be cashed in by completing the form on the back of the certificate of investment and sending it to NS&I. In the event that an interest payment cannot be prevented from being made after the last date on which interest is earned, the amount of any overpayment will be deducted from the amount to be cashed in.

53. The capital value of a Bond to be cashed in will earn interest due under paragraphs 4 to 10 (inclusive) from the date of purchase (see paragraph 30) up to but not including the date it is cashed in. Any interest earned but not yet paid will be added to the capital to be cashed in.

54. Partial encashments Part of a holding may be cashed in in accordance with paragraphs 51 to 53. The minimum amount that can be cashed in is £500 and at least £500 must remain invested in Bonds (see paragraph 43).

Payments by electronic transfer
55. Payment will normally be made by electronic transfer to a UK bank account (including a National Savings Bank Investment Account, Easy Access Savings Account or Direct Saver) or a building society account.

56. We intend to use BACS as the means of making these electronic transfers (although we reserve the right to use a different means if necessary).

57. For the purpose of determining the amount payable, the date a Bond, or part of a Bond, is cashed in will be taken to be the date on which, in the normal course, the requested amount would be credited to the nominated account following initiation of the electronic transfer by us. In the case of BACS, this is normally two banking days after the electronic transfer is initiated.

58. Where an electronic transfer is initiated properly we will not be liable for:
(a) any failure or delay of the receiving bank or building society in crediting the specified account; or
(b) any failure or delay in any part of the electronic process which is beyond our direct control;
including any failure which occurs because the specified account is incapable of receiving an electronic transfer.

Payments by crossed warrant
59. In exceptional circumstances payment can, on request, be made by crossed warrant (like a cheque). In such cases the date a Bond, or part of a Bond, is cashed in, will be taken to be the date on the warrant.

Children
60. Interest on a Bond held in the name of a child under 7 years of age, or by two such children jointly, will be paid into a bank account (including a National Savings Investment Account, Easy Access Savings Account or Direct Saver) or building society account in the name of the child (or children) or in the name of a person who satisfies us that he or she is a proper person to receive payment. This will normally be the person with parental responsibility for the child(ren).

61. We will repay a Bond held in the name of a child(ren) under 7 years of age to any person (on their instructions) who satisfies us that he or she is a proper person to receive payment. Normally that is the person with parental responsibility for the child(ren).
       
62. Once a child has reached the age of 7 years, repayment will normally only be made to the child, on his or her instructions.

Joint investments
63. Where Bonds are held jointly by two or more holders:
(a) the Bonds will be the joint property of all holders;
(b) to give any instructions relating to the Bond all holders need to sign;
(c) in the event of the death of a joint Bond holder, full ownership will pass to the survivor who will be entitled to operate the Bond on the same terms;
(d) if a Bond holder tells us of a dispute, we may freeze the Bond until we receive written instructions from the holders. At the request of any holder we may suspend interest payments to the account  nominated on the application to invest. However the Bond will continue to earn interest.

Transfer
64. You can only transfer Bonds to someone else, or from one Customer Number to another, with our consent. We will, for example, normally give consent in the case of the inheritance of Bonds on the death of a holder, or to a transfer to benefit from bonus interest. We will not normally consent to any transfer which is by way of sale. But the minimum and maximum holding limits applicable under paragraphs 43 and 45 to 49 apply to the holdings of the transferor and transferee.

Guaranteed life of Bonds and redemption by the Treasury
65. Bonds may be held for 10 years from the date of purchase (see paragraph 30) free of any power of redemption. On giving six months’ notice, in accordance with paragraphs 68 and 69, the Treasury may redeem the holding on any interest payment date after this 10 year period.

66. Interest will continue to be paid under these terms and conditions until the redemption date.

67. We will write to you before redemption, at your last recorded address, to tell you the redemption date.

Notice by the Treasury
68. The Treasury will give any notice required under paragraphs 6, 13 and 65 of these terms and conditions in the London, Edinburgh and Belfast Gazettes or in any other manner which they think fit.

69. If notice is given otherwise than in the Gazettes it will be recorded in them, as soon as is reasonably possible.

Repayment of Bonds by NS&I
70. We can repay Bonds immediately, without needing an application for repayment, if:
(a) we reasonably think any of the persons named in the application have provided false information;
(b) we reasonably suspect that the Bonds are being held for an illegal purpose;
(c) the applicant was not entitled to purchase the Bond, or the Bond holder is not entitled to hold the Bond;
(d) the Bond holder’s holding exceeds the maximum allowable (see paragraph 45);
(e) the Bond holder fails to comply, in a material manner, with the terms or conditions for holding the Bond; or
(f) we have any other valid reason to do so.

Liability
71. If you tell us that a repayment from your holding was not authorised by you, we will carry out an investigation. As soon as we are reasonably satisfied that you did not authorise the repayment, we will, subject to paragraph 72, refund the amount repaid and will return your holding to the position it would have been in if the unauthorised repayment had not taken place. This means that, in addition to the amount of the unauthorised repayment, we will pay any interest on the amount incorrectly paid but we will have no further liability.

72. However, you will be liable for all repayments made from your holding if you have acted fraudulently.

73. If you ask us to make a repayment by electronic transfer and, after a reasonable period has elapsed, the bank or building society to which payment should have been made says that it did not receive the payment, we will refund the amount of the payment and return your holding to the position it would have been in if the payment had not been made, except in the following cases:
(a) there was a mistake in any of the details contained in the repayment instructions you gave us. If this is the case, we will make reasonable efforts to recover the funds;
(b) we can show that the payment was in fact received by the bank or building society to which payment should have been made.

How we use your information
74. We may use any information provided to us to help us:
(a) manage Bonds;
(b) prevent and detect crime;
(c) understand our customers’ requirements; and
(d) develop and test products and services.
It is important that we are advised of any change in details.

75. We treat all the information we hold concerning customers as private and confidential. We will not reveal any personal details or details concerning a customer’s investments to anyone not connected to NS&I, unless:
(a) the customer asks us to reveal the information or we have the customer’s permission to do so;
(b) we are required or permitted to do so by law;
(c) it is required by credit reference and fraud prevention agencies and other companies that provide a service to us or the customer; or
(d) there is a duty to the public to reveal the information.

76. If you are a joint applicant we will pass your information to the other joint applicant(s). When giving us information about another person, you confirm that they have appointed you to act on their behalf. This includes providing consent to process their data as set out in these terms and conditions.

77. We may monitor or record telephone calls for training, quality assurance and other business purposes.

78. From time to time we may change the way we use customer information. Where we believe that customers may not reasonably expect such a change we will notify them personally. If customers do not object to the change within 60 days, we will deem them to have consented to that change.

79. Your information will be held by us in both paper form and on our IT systems and will be kept after the holding is closed in line with our retention procedures. If you would like a copy of the information we hold about you, please make a Data Subject Access Request under the Data Protection Act and send it to: The Data Protection Officer, National Savings and Investments, 1 Drummond Gate, London SW1V 2QX - make sure your request is signed. You can print off and complete the form available in the 'Privacy' section of the NS&I website or write to the Data Protection Officer giving us your full name, current address and any previous addresses, which savings or investments you have with us and the account, holder's or customer numbers. There may be a small charge for this service - if so, we will let you know.

80. We would like to keep customers up to date with information about our products and services which we think might interest them. If a customer does not want to receive this information they can contact us using the details at the end of these terms and conditions.

How to notify us of changes to personal details
81. To enable us to manage your holding effectively and to be able to contact you when necessary we ask that you let us know, as soon as possible, of any changes to your name, address, telephone number or email address. Please use details below to notify us of any such changes.

Complaints
82. If we make a mistake we’ll aim to put things right quickly and without fuss, and we have a procedure designed to resolve complaints effectively and fairly. Complaints can be made in writing to the Customer Service Team at the address at the end of these terms and conditions, by calling us free on 0800 092 1286 (calls from mobiles may not be free), or by visiting nsandi.com, clicking ‘Contact us’, clicking on the ‘Contact us online’ button in the ‘Email us’ section, and selecting ‘complaint’ in the ‘subject’ dropdown menu. A leaflet describing our complaints procedure is available on request or you can download one at nsandi.com, clicking ‘Why save with us’, clicking on ‘Our commitment’ and then clicking on the link under the heading ‘Not happy with our service?’.

83. If a customer feels that we have not resolved their complaint to their satisfaction, they may be able to refer it to the Financial Ombudsman Service (FOS) at South Quay Plaza, 183 Marsh Wall, London E14 9SR (Tel 0800 023 4567). The FOS is an organisation set up by law to give consumers a free and independent service for resolving disputes.

Changes to these terms and conditions
84. The Treasury reserves the right to amend these terms and conditions at any time. If the change is to the Bond holder’s detriment we will let them know personally at least 30 days before the change. If this is the case you can switch to another NS&I product or cash in your Bonds without notice or penalty within 60 days of us telling you.

85. For any other changes we will let customers know by updating our website and, if appropriate, in a range of national newspapers.

Regulations
86.    As at 1 August 2011, The National Savings Stock Register Regulations 1976 (Statutory Instrument Number 1976/2012) have been amended by the following Statutory Instruments:

87. Copies of UK legislation can be purchased from the TSO Parliamentary and Legal Bookshop.

Law and jurisdiction
88. These terms and conditions and any agreement made on the basis of them will be governed by and interpreted in accordance with English law and available in the English and Welsh languages.

89. In the event of the death of a Bond holder, the Director reserves the right to make any payment in respect of the Bond in accordance with the law of the place in which the Bond holder resided, or if different, was domiciled at the date of their death.

90. Subject to paragraphs 91 and 92, the courts of England are to have exclusive jurisdiction to settle any dispute (including claims for set off and counterclaims) which may arise in connection with these terms and conditions or any agreement made on the basis of them and which, subject to the Regulations, falls to be determined by a court of law.

91. Where section 16 of the Civil Jurisdiction and Judgments Act 1982 applies the relevant court of law of the relevant part of the United Kingdom shall have jurisdiction to settle any such dispute.

92. Paragraphs 90 and 91 are included for the benefit of NS&I. Accordingly NS&I retains the right to bring proceedings in any other court which has jurisdiction to whose jurisdiction the holder irrevocably submits.

Income Bonds
National Savings and Investments
GLASGOW
G58 1SB
Telephone 0500 007 007
Fax 0141 636 8744

1 August 2011

PLEASE KEEP FOR REFERENCE