Regulators Deal Blow To H&R Block Tax Refund Loans
WASHINGTON – Regulators may have dealt a fatal blow to H&R Block Inc.’s tax-refund loan program through its main partner, HSBC Holdings PLC.
American Banker, an affiliate of Credit Union Journal, reported that the Kansas City, Mo., tax preparer released a statement saying that HSBC is terminating a contract the companies have to offer refund anticipation loans after the Office of the Comptroller of the Currency ordered HSBC to stop offering “any form of” the product.
“While we are very disappointed by this decision, we have been preparing for the loss of RALs, so we have several other financial products available and under development for this tax season,” Alan Bennett, H&R Block’s president and chief executive, said in the press release. Yet the “OCC's 11th hour timing will make it difficult for us to put alternative products in place at all of our locations in time for the early part of the 2011 tax season,” he said.
H&R Block said it would continue offering customers refund anticipation checks that do not require out-of-pocket expenses by taxpayers at the time their tax return is filed, American Banker reported.
In a recent filing with the U.S. Securities and Exchange Commission, H&R Block sued HSBC Bank USA and certain affiliates in federal court to require HSBC to meet its contractual obligations to offer the loans at the tax preparer’s retail offices.
In January, HSBC extended a new $2.5 billion line of credit to H&R Block to buy participation interests in the loans during the most recent tax season. H&R Block generated $146.2 million of revenue from participating in refund anticipation loans during the fiscal year ended April 30, according to the filing.