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5. Interest Rate Change on Cash Account

Interest Rate Change on Cash Account

Important information regarding an interest rate reduction on Bond cash accounts

From 14th June 2025 instead of using the variable Bank of England base-rate which is currently set at 4.5% less 0.2% to calculate the amount of interest, we will instead pay policyholders the amount of interest that HSBC Life earns on the balance held in their cash account. This rate supersedes any rate previously notified to them and is subject to future change.

This will impact customers as it will mean a reduction in interest to their cash accounts. The applicable rate of interest will continue to vary.

Customers do not need to do anything as we will calculate interest due on their cash accounts automatically and pay it into their accounts each month. The change only affects the amount of interest we pay in future on their cash account, there is no impact on what we have already paid them.

The sample policyholder letter below shows an example of the loss these changes will create, based on a cash account holding of £10,000, as at the end of October 2024.

If you need further information, please contact our Administration Support Team via mail servicing@bond.hsbc.co.uk or telephone:  0345 603 9164 (9am to 5.30pm -Monday to Friday, excluding public holidays).

Important information regarding a reduction in interest rate on your Bond’s cash account

What currently happens?

You currently hold a HSBC Onshore Investment Bond which you would have taken out with the help of an Adviser.  The Bond is made up of an amount which is invested in funds chosen by you or your Adviser, plus a cash account which is used to pay any fees or regular withdrawals. 

Interest is calculated daily on the balance of your cash account and the rate used is based on the Bank of England base-rate less 0.2%. The interest rate is therefore variable. The amount of interest we apply is shown in your six-monthly statement.

What are we changing?

We will still pay interest on cash balances, but we’re changing the way we calculate the rate used, as allowed for in the ‘Cash Account’ section of your product Terms and Conditions.

From 14^th June 2025, instead of using the Bank of England base-rase less 0.2% to calculate the amount of interest, we will instead pay you the amount of interest that we earn on the balance in your cash account. This rate supersedes any rate previously notified to you and is subject to future change.

How does this impact me?

We are sorry but it will mean a reduction in interest paid into your cash account. The applicable rate of interest will continue to vary.

The table below shows an example of the reduction these changes will create, based on a cash account holding of £10,000 as at 31^st January 2025.

Why has the interest rate changed?

The interest rate that we use to calculate the interest on your cash account is not aligned to the amount of interest that we receive. We’re therefore correcting this. We will pay you 100% of the interest that we receive on cash.

What do I need to do next?

You do not need to do anything as we will calculate gross interest due on your cash account automatically and pay it into your account each month from 14^th June 2025. The change only affects the amount of interest we pay in future on your cash account, there is no impact on what we have already paid you.

If you wish to receive additional information, please get in touch.

If you would like more information, please feel free to get in touch:

• By phone – 0345 6039164*
• By writing to us at: HSBC Life (UK) Limited, Administration Office, PO Box 1053, St Albans, AL1 9QG.

*Lines are open from 9am to 5.30pm Monday to Friday (excluding public holidays). 

Need extra support?

•          There are other options available to help you communicate with us.

•          To find out more please get in touch.

Yours sincerely

HSBC Life (UK) Limited

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