Shares of H&R Block Inc. (NYSE: HRB) are dropping after the tax preparation company said that HSBC Holdings Plc (NYSE: HBC) has ended funding its refund-anticipation loans (RALs).

The U.S. government’s Office of the Comptroller of the Currency (OCC) ordered HSBC to terminate the loans.

HRB shares are down 7.1 percent as of 12:15 pm (EDT).

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, said HRB’s chief executive officer Alan Bennett.

“Millions of taxpayers will be deprived of credit, or they will be forced to use higher-priced alternatives.”

H&R Block said it will continue to provide its refund-anticipation checks (RACs) which don’t require any out-of-pocket costs by taxpayers.

Scott Schneeberger, an analyst at Oppenheimer analyst, wrote in a note to clients that “with less than three weeks before the 2011 tax season begins, HRB’s competitive position appears significantly weakened,”

Late last summer, the U.S. Internal Revenue Service warned that it would not help banks, including HSBC, to underwrite RALs anymore, which have been widely criticized by consumer advocates as carrying exorbitant interest rates,

HRB shares have struggled all year, down almost 50 percent year to date.