There may not be much legal basis for HSBC's hesitancy to provide financial products for H&R Block, but the exchange of letters and the court documents generated by the dispute are still very telling.
HSBC has failed to perform a number of steps necessary for the fulfillment of their retail distribution agreement (the "RDA"). Block expected HSBC to provide a template for a RAL and RAC application form by September 1st, along with a list of fees for those products. On September 15th, Block expected to have HSBC's underwriting criteria for refund anticipation loans, as well as a template for disclosure statements that are programmed into the tax preparation software used by Block staff.
John Butler of HSBC sent a letter to the assistant Vice-President for Settlement Products at H&R Block on August 30th. Butler wrote that the agreement terms state that "the Settlement Products Program must be consistent with safe and sound banking practices." There was no specific factor given for what constituted a lack of such sound practices, but it is fairly easy to see the reference: the IRS had suspended the debt indicator on August 5th.
Unfortunately for HSBC, their contract doesn't give HSBC room to make that statement. There is a portion of the RDA that covers termination which gives either party grounds to quit the contract if there is some change in how the IRS sanctions RALs and RACs. Here is