BASE PROSPECTUS

HSBC Finance Corporation (successor by merger to Household Finance Corporation)

(incorporated in the State of Delaware, United States of America)

as Issuer

U.S.$35,000,000,000

PROGRAM FOR THE ISSUANCE OF DEBT INSTRUMENTS

Application has been made to the Luxembourg Commission de Surveillance du Secteur Financier (the "CSSF"), which is the Luxembourg competent authority under Luxembourg law for the purpose of regulating the Directive 2003/71/EC (the "Prospectus Directive") and relevant implementing measures in Luxembourg, to approve this base prospectus (the "Base Prospectus") as a base prospectus issued in compliance with the Prospectus Directive and relevant implementing measures in Luxembourg for the purpose of giving information with regard to the issue of debt instruments with a redemption amount equal to 100 per cent. of their outstanding principal amount under the program described in this Base Prospectus (the "Program"). Application has been made for debt instruments issued under the Program to be admitted to trading on the regulated market of the Luxembourg Stock Exchange.

In relation to each separate issue of debt instruments (the "Instruments"), the final offer price and amount of such Instruments will be determined by HSBC Finance Corporation (the "Issuer" or "HSBC Finance") and the relevant Dealers in accordance with prevailing market conditions at the time of the issue of the Instruments and will be set out in the applicable final terms (the "Final Terms").

The Issuer may agree with any Dealer that Instruments may be issued in a form not contemplated by the Final Terms of the Instruments herein, in which event a supplementary Base Prospectus or further Base Prospectus, if appropriate, will be made available which will describe the effect of agreement reached in relation to such Instruments.

Arranger for the Program

HSBC

Dealers

ABN AMRO BARCLAYS CAPITAL DEUTSCHE BANK HSBC JPMORGAN MERRILL LYNCH INTERNATIONAL

BANCO BILBAO VIZCAYA ARGENTARIA, S.A.CREDIT SUISSE FIRST BOSTON

FORTIS BANKING WHOLESALE BANKING

LANDESBANK BADEN-WÜRTTEMBERGMORGAN STANLEY

UBS INVESTMENT BANK

9 September 2005

ii

This document replaces the Information Memorandum dated 2 June 2004, as supplemented by the Supplemental Information Memorandum dated 15 March 2005.

This document, which is a base prospectus, constitutes a prospectus for the purposes of Article 5.4 of the Prospectus Directive.

References herein to the "Program Date" are to the date specified on the cover of this Base Prospectus.

This Base Prospectus should be read and construed with any amendment or supplement thereto, and with any other documents incorporated by reference and, in relation to any Series (as defined herein) of Instruments, should be read and construed together with the relevant Final Term(s) (as defined herein).

The Issuer has confirmed to the dealers (the "Dealers") named under "Subscription and Sale" that this Base Prospectus is true, accurate and complete in all material respects and is not misleading; that the opinions and intentions expressed herein are honestly held and based on reasonable assumptions; that there are no other facts in relation to the information contained or incorporated by reference in this Base Prospectus, the omission of which would, in the context of the Program or the issue of the Instruments, make any statement herein or opinions or intentions expressed herein misleading in any material respect; and that all reasonable enquiries have been made to verify the foregoing. The Issuer has further confirmed to the Dealers that this Base Prospectus (together with the relevant Final Terms) contains all such information as may be required by applicable laws, rules and regulations.

No person has been authorized by the Issuer to give any information or to make any representation not contained in or not consistent with this Base Prospectus or any other document entered into in relation to the Program or any information supplied by the Issuer or such other information as is in the public domain and, if given or made, such information or representation should not be relied upon as having been authorized by the Issuer or any Dealer.

The distribution of this Base Prospectus and any Final Terms and the offering, sale and delivery of the Instruments in certain jurisdictions may be restricted by law. Persons into whose possession the Base Prospectus or any Final Terms comes are required by the Issuer and the Dealers to inform themselves about and to observe any such restrictions. For a description of certain restrictions on offers, sales and deliveries of Instruments and on the distribution of this Base Prospectus or any Final Terms and other offering material relating to the Instruments, see "Subscription and Sale". In particular, the Instruments have not been and will not be registered under the United States Securities Act of 1933 (as amended) (the "Securities Act") or any state securities laws and may include Instruments in bearer form which are subject to U.S. tax law requirements. The Instruments may not be offered, sold or delivered within the United States or to U.S. persons (other than distributors) unless the Instruments are registered under the Securities Act or an exemption therefrom is available. Neither this Base Prospectus nor any Final Terms may be used for the purpose of an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.

Neither this Base Prospectus nor any Final Terms constitutes an offer or an invitation to subscribe for or purchase any Instruments and should not be considered as a recommendation by the Issuer or any of the Dealers that any recipient of this Base Prospectus or any Final Terms should subscribe for or purchase any Instruments. Each recipient of this Base Prospectus or any Final Terms shall be taken to have made its own investigation and appraisal of the condition (financial or otherwise) of the Issuer.

No representation or warranty is made or implied by any of the Dealers or any of their respective affiliates, and none of the Dealers nor any of their respective affiliates makes any representation or warranty or accepts any responsibility, as to the accuracy or completeness of the information relating to the Issuer contained in this Base Prospectus.

Neither the delivery of this Base Prospectus or any Final Terms nor the offering, sale or delivery of any Instrument shall, in any circumstances, create any implication that the information contained in this Base Prospectus is true subsequent to the date thereof or the date upon which this Base Prospectus has been most recently amended or supplemented or that there has been no material adverse change in the financial situation of the Issuer since the date thereof or, as the case may be, the date upon which this Base Prospectus has been most recently amended or supplemented or the balance sheet date of the most recent financial statements which are deemed to be incorporated by reference into this Base Prospectus or that any other information supplied in

connection with the Program is correct at any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same.

All references in this Base Prospectus to "U.S. dollars", "U.S.$", or "$" are to the lawful currency of the United States of America, those to "euro" refer to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty establishing the European Communities, as amended by the Treaty on European Union and the Treaty of Amsterdam, references to "Yen" and "¥" are to Japanese Yen and references to "Sterling" and "£" are to United Kingdom pounds sterling.

Notwithstanding anything to the contrary in this Base Prospectus, each prospective investor (and each employee, representative or other agent of each prospective investor) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of an investment in the Instruments and all materials of any kind (including opinions or other tax analyses) that are provided to the prospective investor relating to such tax treatment and tax structure. This authorization of tax disclosure is retroactively effective to the commencement of discussions between the Dealer or its representatives and a prospective investor regarding the transactions contemplated herein.

Responsibility Statement

HSBC Finance accepts responsibility for the information contained in this Base Prospectus. HSBC Finance, having taken all reasonable care that such is the case, confirms that the information contained in this Base Prospectus is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its import.

iii

TABLE OF CONTENTS

SUMMARY OF THE PROGRAM ........................................................................................................................ 3

RISK FACTORS .................................................................................................................................................... 7

REGULATORY FRAMEWORK ........................................................................................................................ 11

DOCUMENTS INCORPORATED BY REFERENCE ....................................................................................... 11

TERMS AND CONDITIONS OF THE INSTRUMENTS .................................................................................. 14

FORM OF WHOLESALE FINAL TERMS......................................................................................................... 41

USE OF PROCEEDS ........................................................................................................................................... 51

HSBC FINANCE CORPORATION .................................................................................................................... 52

SELECTED FINANCIAL INFORMATION OF HSBC FINANCE ................................................................... 53

SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN U.S. GAAP AND INTERNATIONAL FINANCIAL REPORTING STANDARDS .......................................................................................... 56

MANAGEMENT ................................................................................................................................................. 60

UNITED STATES TAXATION OF UNITED STATES ALIENS...................................................................... 62

SUBSCRIPTION AND SALE ............................................................................................................................. 64

GENERAL INFORMATION............................................................................................................................... 67

REGISTERED OFFICE OF THE ISSUER.......................................................................................................... 70

In connection with the issue of any Tranche of Instruments under the Program, the Dealer or Dealers (if any) named as the Stabilizing Manager(s) (or persons acting on behalf of the Stabilizing Manager(s)) in the applicable Final Terms may over-allot Instruments (provided that, in the case of any Tranche of Instruments to be admitted to trading on the Luxembourg Stock Exchange, the aggregate principal amount of Instruments allotted does not exceed 105 per cent. of the aggregate principal amount of the relevant Tranche) or effect transactions with a view to supporting the market price of the Instruments at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilizing Manager(s) (or persons acting on behalf of a Stabilizing Manager) will undertake stabilization action. Any stabilization action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Instruments is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Instruments and 60 days after the date of the allotment of the relevant Tranche of Instruments.

1

[This page has been left blank intentionally]

2

SUMMARY OF THE PROGRAM

The following is a brief summary only and should be read in conjunction with the more detailed information appearing elsewhere in this Base Prospectus. Any decision to invest in any Instruments should be based on a consideration of this Base Prospectus as a whole, including the documents incorporated by reference and the applicable Final Terms.

Issuer: HSBC Finance Corporation.

Arranger: HSBC Bank plc.

Dealers: ABN AMRO Bank N.V., Banco Bilbao Vizcaya Argentaria, S.A., Barclays Bank PLC, Credit Suisse First Boston (Europe) Limited, Deutsche Bank AG, London Branch, Fortis Bank nv-sa, HSBC Bank plc, ING Bank N.V., J.P. Morgan Securities Ltd., Landesbank Baden-Württemberg, Merrill Lynch International, Morgan Stanley & Co. International Limited and UBS Limited and any other dealer appointed from time to time by the Issuer either generally in respect of the Program or in relation to a particular Tranche (as defined below) of Instruments.

Fiscal and Principal Paying Agent: HSBC Bank plc.

Luxembourg Listing Agent: Dexia Banque Internationale à Luxembourg, société anonyme.

Initial Program Amount: The maximum aggregate principal amount of Instruments outstanding at any one time under the Program will not exceed U.S.$35,000,000,000 (and, for this purpose, (i) any Instruments denominated in another currency shall be translated into U.S.$ at the date of the agreement to issue such Instruments using the spot rate of exchange for the purchase of such currency against payment of U.S. dollars being quoted by the Fiscal Agent on the date on which the Relevant Agreement in respect of the relevant Tranche (as defined below) was made or such other rate as the Issuer and the Relevant Dealer may agree and (ii) the principal amount of any Instruments issued and outstanding under prior programs, including instruments previously issued by Household Finance Corporation (which were assumed by HSBC Finance (formerly known as Household International, Inc.)) and Household International, Inc., shall be included for purposes of calculating the maximum aggregate principal amount outstanding at any one time under the Program) in aggregate principal amount of Instruments outstanding at any one time. The maximum aggregate principal amount of Instruments which may be outstanding under the Program may be increased from time to time, subject to compliance with the relevant provisions of the Dealership Agreement as defined under "Subscription and Sale".

Distribution: Instruments may be distributed outside the United States to persons other than U.S. persons (as such terms are defined in Regulation S under the Securities Act) by way of private or public placement, in each case on a syndicated or non-syndicated basis, subject to the selling restrictions described under "Subscription and Sale".

Issuance in Series: Instruments will be issued in series (each, a "Series"). Each Series may comprise one or more tranches ("Tranches" and each, a "Tranche") issued on different issue dates. The Instruments of each Series will all be subject to identical terms, except that (i) the issue date and the amount of the first payment of interest may be

3

different in respect of different Tranches and (ii) a Series may comprise Instruments in bearer form and Instruments in registered form and Instruments in more than one denomination. The Instruments of each Tranche will all be subject to identical terms in all respects save that a Tranche may comprise Instruments in bearer form and Instruments in registered form.

Form of Instruments: Instruments may be issued in bearer form or in registered form. In respect of each Tranche of Instruments issued in bearer form, the Issuer will deliver one or more temporary global Instruments. Such global Instrument(s) will be deposited on or before the relevant issue date therefor, as set forth in the relevant Final Terms, with a depositary or a common depositary for Euroclear Bank S.A./N.V., as operator of the Euroclear System ("Euroclear"), and/or Clearstream Banking, société anonyme, ("Clearstream, Luxembourg") and/or any other relevant clearing system. Each temporary global Instrument may be exchangeable for one or more permanent global Instruments or, if so specified in the relevant Final Terms, for Instruments in definitive bearer form and/or (in the case of a Series comprising both bearer and registered Instruments and if so specified in the relevant Final Terms) registered form in accordance with its terms, in each case not earlier than the Exchange Date upon certification as to non-U.S. beneficial ownership in the manner required by applicable United States Treasury Department regulations and/or the United States securities laws. Each permanent global Instrument will be exchangeable for Instruments in definitive bearer form and/or registered form in accordance with its terms. Such definitive bearer Instruments and/or registered Instruments will be issued and delivered, in full exchange for such permanent global Instrument, to Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system for the accounts of the holders of interests in such permanent global Instrument. Any interest in a temporary or permanent global Instrument will be transferable only in accordance with the rules and procedures for the time being of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system, as appropriate. Instruments in definitive bearer form will, if interest-bearing, either have interest coupons ("Coupons") and, if appropriate, a talon ("Talon") for further Coupons attached or have a grid for recording the payment of interest endorsed thereon and will, if the principal thereof is repayable by instalments, have a grid for recording the payment of principal endorsed thereon or, if so specified in the relevant Final Terms, have payment receipts ("Receipts") attached. Instruments in registered form may not be exchanged for Instruments in bearer form.

Currencies: Instruments may be denominated in any currency or currencies subject to compliance with all applicable legal and/or regulatory and/or central bank requirements. Payments in respect of Instruments may, subject to compliance as aforesaid, be made in and/or linked to, any currency or currencies other than the currency in which such Instruments are denominated as may be specified in the relevant Final Terms. See "Subscription and Sale".

Unless permitted by then current laws and regulations, Instruments (including Instruments denominated in Sterling) issued on terms that they have a maturity of less than one year from their date of issue will, if the issue proceeds of such Instruments are to be accepted by the Issuer in the United Kingdom, constitute deposits

4

for the purposes of the prohibition on accepting deposits contained in section 19 of the Financial Services and Markets Act of 2000 ("FSMA") unless they are issued to a limited class of professional investors and have a minimum Redemption Amount of £100,000 (or its equivalent in other currencies).

Status: Instruments will be issued on an unsecured and unsubordinated basis, subject to the Negative Pledge provisions described herein. Instruments are not savings accounts or deposits, and are not obligations of, guaranteed or insured by, any United States or foreign regulatory agency or authority.

Issue Price: Instruments may be issued at any price and either on a fully or partly paid basis, as specified in the relevant Final Terms.

Maturities: Any maturity between one month and thirty years, subject, in relation to specific currencies, to compliance with all applicable legal and/or regulatory and/or central bank requirements.

Redemption: Instruments may be redeemable at par or at such other Redemption Amount (detailed in a formula or otherwise) as may be specified in the relevant Final Terms.

Early Redemption: Early redemption will be permitted for taxation reasons as described in "Terms and Conditions of the Instruments —Redemption and Purchase — Early Redemption for Taxation Reasons", but will otherwise be permitted only to the extent specified in the relevant Final Terms.

Interest: Instruments may be interest-bearing or non-interest bearing. Interest (if any) may accrue at a fixed or floating rate and may vary during the lifetime of the relevant Series.

Denominations: Instruments will be issued in such denominations as may be specified in the relevant Final Terms, subject to a minimum denomination of €50,000 (or its equivalent in other currencies) and to compliance with all applicable legal and/or regulatory and/or central bank requirements. Unless permitted by then current laws and regulations, Instruments (including Instruments denominated in Sterling) issued on terms that they have a maturity of less than one year from their date of issue may be subject to restrictions on their denomination and distribution. See "Currencies" above.

Taxation: Except as otherwise specified in the relevant Final Terms, payments in respect of Instruments will be made without withholding or deduction for, or on account of, any present or future taxes, assessments or governmental charges of whatever nature imposed or levied by or on behalf of the United States or any political subdivision thereof or any authority or agency therein or thereof having power to tax, unless the withholding or deduction of such taxes, assessments or governmental charges is required by law. In that event, except as otherwise specified in the relevant Final Terms, the Issuer will (subject to customary exceptions) pay such additional amounts as will result in the holders of Instruments or Coupons who are United States Aliens (as defined in the Terms and Conditions) receiving such amounts as they would have received in respect of such Instruments or Coupons had no such withholding or deduction been required.

5

Governing Law: The Instruments and all related contractual documentation will be governed by, and construed in accordance with, the laws of the State of New York.

Listing: Each Series may be listed on the Luxembourg Stock Exchange and/or listed or admitted to trading on or by any other relevant stock exchange or market as may be agreed between HSBC Finance and the relevant Dealer or may be unlisted, in each case as specified in the relevant Final Terms.

Terms and Conditions: Final Terms will be prepared in respect of each Tranche of Instruments, a copy of which, in the case of Instruments to be listed on the Luxembourg Stock Exchange, will be delivered to the Luxembourg Stock Exchange. The terms and conditions applicable to each Tranche will be those set out herein under "Terms and Conditions of the Instruments" as supplemented, modified or replaced by the relevant Final Terms.

Redenomination, Renominalization and/or Reconventioning:

Final Terms for the applicable Tranche of Instruments may provide that certain Instruments may be subject to redenomination into euro, renominalization and/or reconventioning in accordance with applicable laws and regulations and the current market practice. Further provisions relating to such redenomination, renominalization and/or reconventioning may be made in the applicable Final Terms.

Enforcement of Instruments in Global Form:

In the case of Instruments in global form, individual investors' rights will be governed by the Issue and Paying Agency Agreement, a copy of which will be available for inspection at the specified office of the Fiscal Agent.

Clearing Systems: Euroclear, Clearstream, Luxembourg and/or any other clearing system as may be specified in the relevant Final Terms.

Ratings: The Issuer's long-term unsecured and unsubordinated debt has been rated by Moody's, Standard & Poor's and Fitch Ratings. Tranches of Instruments issued under the Program may be rated or unrated. Where a Tranche of Instruments is rated, such ratings will not necessarily be the same as any ratings assigned to the Issuer. A rating is not a recommendation to buy, sell or hold Instruments and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. The ratings do not address the possibility of the imposition of any withholding tax with respect to any United States Alien.

Selling Restrictions: For a description of certain restrictions on offers, sales and deliveries of Instruments and on the distribution of offering material in the United States of America, the United Kingdom, Japan, the Republic of France and Germany, see "Subscription and Sale".

6

RISK FACTORS

The following section does not describe all of the risks of an investment in Instruments of the Issuer, including risks resulting from the amounts payable in respect thereof being determined by reference to indices or another basis of reference. Prospective investors should consult their own financial and legal advisors about risks associated with an investment in the Instruments and the suitability of investing in such Instruments in light of their particular circumstances.

Risks related to HSBC Finance's Business

General

HSBC Finance is the principal fund raising company for its subsidiaries. HSBC Finance generates cash to fund its businesses primarily by collecting receivable balances; issuing commercial paper, medium and long term debt; borrowing from HSBC Holdings plc ("HSBC Holdings") subsidiaries and customers; securitizing and selling consumer receivables; and borrowing under secured financing facilities. As a participant in the financial services industry, HSBC Finance is influenced by numerous unpredictable factors. The important factors, many of which are out of HSBC Finance's control, which could affect its actual results and could cause its results to vary materially from those expressed in public statements or documents include:

• changes in laws and regulations, including attempts by local, state and national regulatory agencies or legislative bodies to control alleged "predatory'' lending practices through broad or targeted initiatives aimed at lenders operating in consumer lending markets;

• increased competition from well-capitalized companies or lenders with access to government sponsored organizations for its consumer segment which may impact the terms, rates, costs or profits historically included in the loan products HSBC Finance offers or purchases;

• changes in accounting or credit policies, practices or standards, as they may be internally modified from time to time or changes as may be required by regulatory agencies or the Financial Accounting Standards Board;

• changes to operational practices from time to time, such as determinations to sell receivables from its private label and mortgage services businesses and the potential MasterCard* and VISA* receivable sale, structuring more securitizations as secured financings, or changes to its customer account management policies and practices and risk management/collection practices;

• changes in overall economic conditions, including the interest rate environment in which HSBC Finance operates, the capital markets in which it funds its operations, the market values of consumer owned real estate throughout the United States, recession, employment and currency fluctuations;

• consumer perception of the availability of credit, including price competition in the market segments HSBC Finance targets and the ramifications or ease of filing for personal bankruptcy;

• the effectiveness of models or programs to predict loan delinquency or loss and initiatives to improve collections in all business areas, and changes HSBC Finance may make from time to time in these models, programs and initiatives;

• continued consumer acceptance of its distribution systems and demand for its loan or insurance products;

• changes associated with, as well as the difficulty in, integrating systems, operational functions and cultures, as applicable, of any organization or portfolio acquired by HSBC Finance;

* MasterCard and VISA are registered trademarks of MasterCard International, Incorporated and VISA USA, Inc., respectively.

7

• a reduction of its debt ratings by any of the nationally recognized statistical rating organizations that rate these instruments to a level that is below its current rating;

• the costs, effects and outcomes of regulatory reviews or litigation relating to its nonprime loan receivables or the business practices or policies of any of its business units, including, but not limited to, additional compliance requirements;

• increased funding costs resulting from instability in the capital markets and risk tolerance of fixed income investors;

• the costs, effects and outcomes of any litigation matter that is determined adversely to HSBC Finance or its businesses;

• the ability to attract and retain qualified personnel to support the underwriting, servicing, collection and sales functions of its businesses;

• failure to obtain expected funding from HSBC Holdings' subsidiaries and clients; and

• the inability of HSBC Finance to manage any or all of the foregoing risks as well as anticipated.

Regulatory Risk

HSBC Finance and the financial services industry in general are also impacted by the current regulatory and legislative environment. HSBC Finance's consumer finance businesses operate in a highly regulated environment. These businesses are subject to laws relating to consumer protection, discrimination in extending credit, use of credit reports, privacy matters, disclosure of credit terms and correction of billing errors. They also are subject to certain regulations and legislation that limit operations in certain jurisdictions. For example, limitations may be placed on the amount of interest or fees that a loan may bear, the amount that may be borrowed, the types of actions that may be taken to collect or foreclose upon delinquent loans or the information about a customer that may be shared. HSBC Finance's consumer branch lending offices are generally licensed in those jurisdictions in which they operate. Such licenses have limited terms but are renewable, and are revocable for cause. Failure to comply with these laws and regulations may limit the ability of HSBC Finance's licensed lenders to collect or enforce loan agreements made with consumers and may cause HSBC Finance's lending subsidiaries to be liable for damages and penalties.

There also continues to be a significant amount of legislative activity, nationally, locally and at the state level, aimed at curbing lending practices deemed to be "predatory". In addition, states have sought to alter lending practices through consumer protection actions brought by state attorney general and other state regulators. Legislative activity in this area is expected to continue targeting certain abusive practices such as loan "flipping" (making a loan to refinance another loan where there is no tangible benefit to the borrower), fee "packing" (addition of unnecessary, unwanted and unknown fees to a borrower), "equity stripping" (lending without regard to the borrower's ability to repay or making it impossible for the borrower to refinance with another lender), and outright fraud. HSBC Finance does not condone or endorse any of these practices and continues to work with regulators and consumer groups to create appropriate safeguards to avoid these abusive practices while allowing its borrowers to continue to have access to credit for personal purposes, such as the purchase of homes, automobiles and consumer goods. As part of this effort, HSBC Finance has adopted a set of lending best practice initiatives. Increased legislative and regulatory focus is also expected on tax refund anticipation loans. It is possible that broad legislative initiatives will be passed which will impose additional costs and rules on HSBC Finance's businesses. Although HSBC Finance has the ability to react quickly to new laws and regulations, it is too early to estimate the effect, if any, these activities will have on HSBC Finance either in a particular locality or nationally.

Litigation Risk

HSBC Finance is party to various legal proceedings resulting from ordinary business activities relating to its current and/or former operations. Certain of these actions are or purport to be class actions seeking damages in very large amounts. These actions assert violations of laws and/or unfair treatment of consumers. Due to the uncertainties in litigation and other factors, HSBC Finance cannot be certain that it will ultimately

8

prevail in each instance. HSBC Finance believes that its defenses to these actions have merit and any adverse decision should not materially affect the consolidated financial condition of HSBC Finance.

During the past several years, the press has widely reported certain industry related concerns that may impact HSBC Finance. Some of these involve the amount of litigation instituted against finance and insurance companies operating in certain states and the large awards obtained from juries in those states. Like other companies in this industry, some of HSBC Finance's subsidiaries are involved in a number of lawsuits pending against them in these states. The cases, in particular, generally allege inadequate disclosure or misrepresentation of financing terms. In some suits, other parties are also named as defendants. Unspecified compensatory and punitive damages are sought. Several of these suits purport to be class actions or have multiple plaintiffs. The judicial climate in these states is such that the outcome of all of these cases is unpredictable. Although HSBC Finance's subsidiaries believe they have substantive legal defenses to these claims and are prepared to defend each case vigorously, a number of such cases have been settled or otherwise resolved for amounts that in the aggregate are not material to HSBC Finance's operations. Appropriate insurance carriers have been notified of each claim, and a number of reservations of rights letters have been received. Certain of the financing of merchandise claims have been partially covered by insurance.

Risks related to Instruments issued by HSBC Finance

Credit Ratings

The credit ratings assigned to the Instruments issued under the Program are a reflection of the rating agencies' respective assessments of HSBC Finance's ability to pay its obligations and may not reflect the potential impact of all risks related to structure, market or other factors discussed above on the value of the Instruments. Additionally, real or anticipated changes in the credit ratings will generally affect the market value of the Instruments.

Early Redemption

If the Instruments are redeemable early at the option of HSBC Finance or are otherwise subject to mandatory redemption, HSBC Finance may elect to (in the case of optional redemption) or must (in the case of mandatory redemption) redeem such Instruments at times when prevailing interest rates may be relatively low. Such right of early redemption is often provided for Instruments in periods of high interest rates. If the market interest rates decrease, the risk to Instrument holders that HSBC Finance will exercise its right of early redemption increases. As a consequence, part of the principal amount invested by a holder may be lost, so that in such case the holder would not receive the total principal amount invested. Accordingly, the holder generally may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as that of the Instruments redeemed.

Trading Market

There can be no assurance that an active trading market for the Instruments will ever develop or be maintained. If an active trading market for the Instruments does not develop or is not maintained, the market or trading price and liquidity of the Instruments may be adversely affected. HSBC Finance or its affiliates are entitled to buy and sell the Instruments for their own account or for the account of others, and to issue further Instruments. Such transactions may favourably or adversely affect the trading market of the Instruments.

Reduced Yield

When Instruments are purchased or sold, several types of incidental costs (including transaction fees and commissions) are incurred in addition to the issue or purchase price of the Instrument. These incidental costs may significantly reduce or even exclude the profit potential of the Instruments. In addition, payments of interest on the Instruments, or profits realized by an investor upon the sale or repayment of Instruments, may be subject to taxation in its home jurisdiction or in other jurisdictions in which it is required to pay taxes. The tax impact on holders generally in the United States is described under "Taxation" herein.

9

Foreign Currency Instruments

As purchasers of foreign currency Instruments, investors are exposed to the risk of changing foreign exchange rates and spot rates. This risk is in addition to any performance risk that relates to the issuer or the type of Instrument being issued.

De-Listing of Instruments from an EU Exchange

Each Series of Instruments may be listed on the Luxembourg Stock Exchange and/or listed or admitted to trading on or by any other relevant stock exchange or market as may be agreed between HSBC Finance and the relevant Dealer or may be unlisted, in each case as specified in the relevant Final Terms.

When the Issuer specifies in the relevant Final Terms that a Series of Instruments is to be listed on the Luxembourg Stock Exchange and/or on or by any other relevant stock exchange and/or market within the European Union which qualifies as a regulated market within the meaning of Article 1(13) of Directive 93/22/EEC (each, for the purposes of the following, an "EU Exchange"), the Issuer will use its best efforts to procure the admission of the relevant Instruments to listing on such EU Exchange and to maintain the same until none of the Instruments of the relevant series is outstanding; provided that, if it should be impracticable or unduly burdensome to maintain any such listing of the Instruments on such EU Exchange(s) it shall use its best efforts to procure and maintain as aforesaid a listing and/or admission to trading for the Instruments on or by such other stock exchange and/or market as it and any relevant Dealer may decide. Changed circumstances, including changes in listing requirements, could result in a suspension or removal of any such listing, or cause the Issuer to conclude that continued listing of the Instruments on such EU Exchange(s) is impractical or unduly burdensome. The Issuer applying for the removal of any such listing on an EU Exchange will do so in accordance with the rules and regulations of such exchange. For example, in December 2004, the Directive of the European Parliament and of the Council of the European Union on the harmonization of transparency requirements with regard to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (the "Directive") was formally adopted. The Directive is expected to be implemented in late 2006 or early 2007. It contains provisions which, if applied would, with respect to Instruments listed on any EU Exchange(s), have the effect of requiring the Issuer to prepare its financial statements in accordance with International Financial Reporting Standards ("IFRS") in order for the Instruments to remain listed on such EU Exchange(s), unless it is determined that the Issuer's financial statements comply with a law which imposes "equivalent" requirements. It is unknown as of the date of this Base Prospectus whether the requirement to prepare financial statements in accordance with accounting principles generally accepted in the United States of America will be determined to be "equivalent" in all respects to the requirements of the Directive.

Any requirement to prepare its financial statements in accordance with IFRS or to provide additional information and/or a report from its auditors as a result of differences between U.S. GAAP and IFRS in order to maintain the continued listing of the Instruments on any EU Exchange(s), or any other circumstances where the EU Financial Services Action Plan is implemented in a manner that could cause the Issuer to conclude that the continued listing of the Instruments on any EU Exchange(s) is impractical or unduly burdensome, may result in the Instruments issued under the Program being de-listed. In such circumstances, the Issuer may take steps to procure the delisting of the Instruments from such EU Exchange(s). If for the above or other reasons the Issuer takes steps to procure the delisting of the Instruments from such EU Exchange(s), the Issuer will seek a replacement listing of the Instruments on or by one or more alternative stock exchanges, competent listing authorities and/or market, which may be outside of the European Union. Although there is no assurance as to the liquidity of the Instruments as a result of a listing on any EU Exchange(s), delisting of the Instruments from any EU Exchange(s) may have a material affect on the ability of a holder of the Instruments to (a) continue to hold such Instruments and/or (b) to resell Instruments held by it in the secondary market.

10

REGULATORY FRAMEWORK

HSBC Finance is subject to the informational requirements of the United States Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports and other information with the United States Securities and Exchange Commission (the "Commission"). Such reports and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices in New York, New York and Chicago, Illinois or through the Commission's worldwide web site on the internet at http://www.sec.gov.

DOCUMENTS INCORPORATED BY REFERENCE

With respect to any offering of the Instruments, the annual report and the interim reports of HSBC Finance listed below shall be deemed to be incorporated by reference in, and to form a part of, this Base Prospectus, and all references herein to this Base Prospectus shall be deemed to include such documents. Accordingly, the following documents shall be deemed to be incorporated in, and to form part of, the Base Prospectus:

(1) the Report of Independent Registered Public Accounting Firm (the "2003 Auditors' Report") relating to the consolidated balance sheet of HSBC Finance (formerly Household International, Inc.) as of December 31, 2003 and related consolidated statements of income, changes in shareholder's(s') equity, and cash flows for the periods January 1, 2003 through March 28, 2003 and March 29, 2003 through December 31, 2003 and for the year ended December 31, 2002;

(2) HSBC Finance's Annual Report on Form 10-K, for the year ended December 31, 2004 ("2004 Annual Report"), including the Report of Independent Registered Public Accounting Firm thereon (the "2004 Auditors' Report"), which 2004 Annual Report includes consolidated balance sheets of HSBC Finance as of December 31, 2004 and December 31, 2003 and related consolidated statements of income, changes in shareholder's(s') equity, and cash flows for the year ended December 31, 2004, for the periods January 1, 2003 through March 28, 2003 and March 29, 2003 through December 31, 2003 and for the year ended December 31, 2002;

(3) HSBC Finance's Quarterly Reports on Form 10-Q/A for the quarters ended March 31, 2004, June 30, 2004 and September 30, 2004 and its Quarterly Reports on Form 10-Q, for the quarters ended March 31, 2005 and June 30, 2005; and

(4) Current Reports on Form 8-K ("Current Report") filed on January 5, 2005, February 28, 2005 (two Current Reports filed on this date), May 16, 2005 (two Current Reports filed on this date), June 22, 2005 (the "June Current Report"), July 1, 2005, August 1, 2005 (two Current Reports filed on this date) and August 4, 2005.

save that any statement contained in a document which is deemed to be incorporated by reference herein, shall be deemed to be modified or superseded for the purpose of this Base Prospectus to the extent that a statement contained herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not be deemed, except as modified or superseded, to constitute part of this Base Prospectus.

This document may contain forward-looking statements that reflect management's current view with respect to future results, achievements and financial performance. Such forward-looking statements involve risks, uncertainties and other factors that may cause the Issuer's actual results, achievements or performance to be materially different from any future results, achievements or performance expressed or implied in such forward-looking statements.

The Issuer has undertaken, in connection with the listing of the Instruments, that if, while Instruments of the Issuer are outstanding and listed on the Luxembourg Stock Exchange, there shall occur any adverse change in the business or financial position of the Issuer that is material in the context of issuance under the Program or there shall occur a material change in the Terms and Conditions of the Instruments or the Program (including an increase in the size of the Program) which is not reflected in this Base Prospectus (or any of the

11

documents incorporated by reference in this Base Prospectus), the Issuer will advise the Luxembourg Stock Exchange of any such material change and prepare or procure the preparation of an amendment or supplement to this Base Prospectus or, as the case may be, publish a new Base Prospectus for use in connection with any subsequent offering by the Issuer of Instruments to be listed on the Luxembourg Stock Exchange.

The Issuer will, at the specified offices of the Paying Agents, provide, free of charge, upon the oral or written request therefor, a copy of this Base Prospectus (or any document incorporated by reference in the Base Prospectus). Written or oral requests for such documents should be directed to the specified office of any Paying Agent or the specified office of the Listing Agent in Luxembourg.

The maximum aggregate principal amount of Instruments outstanding at any one time under the Program will not exceed U.S.$35,000,000,000 (and for this purpose, (i) any Instruments denominated in another currency shall be translated into U.S. dollars at the date of the agreement to issue such Instruments, calculated in accordance with the provisions of the Dealership Agreement and (ii) the principal amount of any Instruments issued and outstanding under prior programs, including instruments previously issued by Household Finance Corporation (which were assumed by HSBC Finance (formerly known as Household International, Inc.)) and Household International, Inc, shall be included for purposes of calculating the maximum aggregate principal amount outstanding at any one time under the Program). The maximum aggregate principal amount of Instruments which may be outstanding at any one time under the Program may be increased from time to time, subject to compliance with the relevant provisions of the Dealership Agreement as defined under "Subscription and Sale".

HSBC Finance's 2004 Annual Report has been incorporated by reference in its entirety. The following selected sections have been provided for informational purposes only and are not exhaustive. Each page reference refers to the corresponding page in the 2004 Annual Report unless otherwise indicated. Each reference to A9 refers to the corresponding rule in Annex IX "Minimum Disclosure Requirements for the Debt and Derivative Securities Registration Document (Schedule) (Debt and derivative securities with a denomination per unit of at least EUR50,000)" and each reference to A13 refers to the corresponding rule in Annex XIII "Minimum Disclosure Requirements for the Securities Note (For debt securities with a denomination per unit of at least EUR50,000)".

Description of "Business - General" Pages 4-6 A9.6.1/A9.5.1/A13.7.5

Description of the "Restatement" Pages 6-7 A9.2.1

Description of "Operations" Pages 7-8 A9.5.1

Description of "Regulation and Competition" Pages 12-13 A9.5.1.2

Description of "Corporate Governance" Page 14 A9.9.1

Description of "Legal Proceedings" Pages 15 – 17 A11.5

Description of "Market for Common Equity and Page 17 A9.10.1 Related Stockholders Matters"

Management's Discussion and Analysis of Pages 22 – 23 A9.11.1 Financial Condition and Results of Operations

Executive Overview: Organisation and Basis of Pages 23 – 25 A9.6.1 Reporting, Performance, Developments and Trends

Basis of Reporting Page 28 A9.11.1

Financial Statements and Supplementary Data "Report of Page 107 A9.2.1/A9.2.2 Independent Registered Public Accounting Firm"

Financial Statements and Supplementary Data Pages 108-111 A9.11.1/A911.2 "Consolidated Statement of Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Shareholder's Equity"

Financial Statements and Supplementary Data Page 112 A9.11.1/A911.2 "Consolidated Statement of Cash Flows"

Financial Statements and Supplementary Data Page 113-174 A9.11.1/A911.2

12

"Notes to Consolidated Financial Statements"

Financial Statements and Supplementary Data "Notes to Page 113 A9.6.1/A10.1 Consolidated Financial Statements – (1) Organisation"

Financial Statements and Supplementary Data "Notes to Pages 166 – 167 A9.5.1 Consolidated Financial Statements – (23) Business Segments"

Changes in and Disagreements with Accountants on Page 175-176 A9.2.2 Accounting and Financial Disclosure Controls and Procedures

Directors and Executive Officers of the Registrant Pages 176 A9.9.1

Principal Accountant Fees and Services, Audit Committee Page 177 A9.2.1 Pre-Approval Policies and Procedures.

Amended and Restated Certificate of Incorporation Exhibit 3(i)/June A9.14(a)/A9.5.1 Current Report

Bylaws Exhibit 3(ii)/ A9.5.1 June Current Report

Certification to Code of Ethics for Senior Financial Officers Exhibit 14 A9.9.1

13

TERMS AND CONDITIONS OF THE INSTRUMENTS

The following are the Terms and Conditions of the Instruments which, as supplemented, modified or replaced in relation to any Instruments by the Base Prospectus and the relevant Final Terms, will be applicable to each Series of Instruments and will be either attached to or incorporated by reference into each global Instrument or will be endorsed on each definitive Instrument.

The Instruments will be issued pursuant to and in accordance with an amended and restated issue and paying agency agreement dated 9 September 2005 (as the same may be amended or supplemented in accordance with the terms thereof, the "Issue and Paying Agency Agreement") by and among HSBC Finance Corporation ("HSBC Finance" or the "Issuer"), HSBC Bank plc in its capacity as fiscal agent (the "Fiscal Agent", which expression shall include any successor to HSBC Bank plc in its capacity as such) and as principal registrar (the "Principal Registrar", which expression shall include any successor to HSBC Bank plc in its capacity as such), HSBC Bank USA, National Association in its capacity as first alternative registrar (the "First Alternative Registrar", which expression shall include any successor to HSBC Bank USA, National Association in its capacity as such), Dexia Banque Internationale à Luxembourg, société anonyme, in its capacity as second alternative registrar (the "Second Alternative Registrar", which expression shall include any successor to Dexia Banque Internationale à Luxembourg, société anonyme, in its capacity as such) and the paying agents named therein (the "Paying Agents", which expression shall include the Fiscal Agent and any substitute or additional paying agents appointed in accordance with the Issue and Paying Agency Agreement). Copies of the Issue and Paying Agency Agreement are available for inspection during normal business hours at the specified office of each of the Paying Agents, the Principal Registrar, the First Alternative Registrar and the Second Alternative Registrar. All persons from time to time entitled to the benefit of obligations under any Instruments shall be deemed to have notice of, and shall be bound by, all of the provisions of the Issue and Paying Agency Agreement insofar as they relate to the relevant Instruments.

The Instruments are issued in series (each, a "Series"), and each Series may comprise one or more tranches ("Tranches" and each, a "Tranche") of Instruments. Each Tranche will be the subject of final terms (each "Final Terms"), a copy of which will be available for inspection (and a copy of which may be obtained) during normal business hours at the specified office of the Fiscal Agent and/or, as the case may be, the Registrar (as defined in Condition 2.02). In the case of a Tranche of Instruments in relation to which application has not been made for listing or admission to trading on any stock exchange and/or market, copies of the Final Terms will only be available for inspection by a Holder (as defined in Condition 2.01) of such Instruments.

References in these Terms and Conditions to Instruments are to Instruments of the relevant Series and any references to Coupons (as defined in Condition 1.06) and Receipts (as defined in Condition 1.07) are to Coupons and Receipts relating to Instruments of the relevant Series.

References in these Terms and Conditions to the Final Terms are to the applicable Final Terms prepared in relation to the Instruments of the relevant Tranche or Series and attached hereto or endorsed hereon. Such Final Terms supplements these Terms and Conditions and may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with these Terms and Conditions, replace or modify these Terms and Conditions for the purposes of this Instrument.

In respect of any Instruments, references herein to these Terms and Conditions are to these terms and conditions as supplemented or modified or (to the extent thereof) replaced by the Final Terms.

1. Form and Denomination

1.01 Instruments are issued in bearer form ("Bearer Instruments") or in registered form ("Registered Instruments"), as specified in the Final Terms and are serially numbered. Registered Instruments will not be exchangeable for Bearer Instruments.

Bearer Instruments

1.02 Each Tranche of Bearer Instruments is represented upon issue by a temporary global Instrument (a "Temporary Global Instrument").

14

Interests in the Temporary Global Instrument may be exchanged for:

(i) interests in a permanent global Instrument (a "Permanent Global Instrument") in accordance with the terms specified in the Final Terms; or

(ii) if so specified in the Final Terms, definitive instruments in bearer form ("Definitive Instruments") and/or (in the case of a Series comprising both Bearer Instruments and Registered Instruments and if so specified in the Final Terms) Registered Instruments.

Exchanges of interests in a Temporary Global Instrument for Definitive Instruments or, as the case may be, a Permanent Global Instrument will be made only on or after the date (the "Exchange Date" as specified in the Final Terms) which is forty days after the date on which the Temporary Global Instrument is issued and provided that certification as to non-U.S. beneficial ownership has been received as required by United States Treasury Department ("U.S. Treasury") regulations (in substantially the form set out in the Temporary Global Instrument). An exchange for Registered Instruments will be made at any time or from such date as may be specified in the Final Terms, in each case, without any requirement for certification.

1.03 The bearer of any Temporary Global Instrument shall not (unless, upon due presentation of such Temporary Global Instrument for exchange (in whole but not in part only) for a Permanent Global Instrument or for delivery of Definitive Instruments and/or Registered Instruments, such exchange or delivery is improperly withheld or refused and such withholding or refusal is continuing at the relevant payment date) be entitled to receive any payment in respect of the Instruments represented by such Temporary Global Instrument which falls due on or after the Exchange Date or be entitled to exercise any option on a date after the Exchange Date.

1.04 Subject to Condition 1.03 above, if any date on which a payment of interest is due on the Instruments of a Tranche occurs while any of the Instruments of that Tranche are represented by a Temporary Global Instrument, the related interest payment will be made on the Temporary Global Instrument only to the extent that certification as to the beneficial ownership thereof as required by U.S. Treasury regulations (in substantially the form set out in the Temporary Global Instrument) has been received by Euroclear Bank S.A./N.V. as operator of the Euroclear System ("Euroclear") or Clearstream Banking, société anonyme, ("Clearstream, Luxembourg") or any other relevant clearing system.

1.05 Interests in a Permanent Global Instrument will be exchanged by the Issuer in whole but not in part only at the option of the Holder of such Permanent Global Instrument, for Definitive Instruments and/or (in the case of a Series comprising both Bearer and Registered Instruments and if so specified in the Final Terms) Registered Instruments, (a) if an Event of Default (as defined in Condition 7.01) occurs in respect of any Instrument of the relevant Series; or (b) if either Euroclear or Clearstream, Luxembourg or any other relevant clearing system is closed for business for a continuous period of fourteen days (other than by reason of public holidays) or announces an intention to cease business permanently or in fact does so; or (c) if so specified in the Final Terms, at the option of the Holder of such Permanent Global Instrument upon such Holder's request (subject to such notice period as may be specified in the relevant Final Terms), in all cases at the cost and expense of the Issuer. In order to exercise the option contained in paragraph (c) of the preceding sentence, the Holder must, no fewer than forty-five days before the date upon which the delivery of such Definitive Instruments and/or Registered Instruments is required, deposit the relevant Permanent Global Instrument with the Fiscal Agent at its specified office with the form of exchange notice endorsed thereon duly completed. If the Issuer does not make the required delivery of Definitive Instruments and/or Registered Instruments by 6.00 p.m. (London time) on the day on which the relevant notice period expires or, as the case may be, the thirtieth day after the day on which such Permanent Global Instrument becomes due to be exchanged and, in the case of (a) above, such Instrument is not duly redeemed (or the funds required for such redemption are not available to the Fiscal Agent for the purposes of effecting such redemption and remain available for such purpose) by 6.00 p.m. (London time) on the thirtieth day after the day at which such Instrument became immediately redeemable then each Holder (as defined in Condition 2.01) or its successors or assigns may, without the consent and to the exclusion of the bearer thereof, file any claim, take any action or institute any proceeding to enforce, directly against the Issuer, the obligation of the Issuer to pay any amount due in respect of each Instrument represented by the Permanent Global Instrument which is credited to such Holders' securities account with a clearing agent as fully as though such Instrument were evidenced by a Definitive Instrument without the production of the Permanent Global Instrument, provided that the bearer thereof shall not theretofore have filed a claim, taken action or instituted proceedings to enforce the same in respect of such Instrument.

15

1.06 Interest-bearing Definitive Instruments have endorsed thereon a grid for recording the payment of interest or, if so specified in the Final Terms, have attached thereto at the time of their initial delivery coupons ("Coupons"), presentation of which will be a prerequisite to the payment of interest save in certain circumstances specified herein. Interest-bearing Definitive Instruments, if so specified in the Final Terms, have attached thereto at the time of their initial delivery, a talon ("Talon") for further coupons and the expression "Coupons" shall, where the context so requires, include Talons.

1.07 Instruments, the principal amount of which is repayable by instalments ("Instalment Instruments") which are Definitive Instruments, have endorsed thereon a grid for recording the repayment of principal or, if so specified in the Final Terms, have attached thereto at the time of their initial delivery, payment receipts ("Receipts") in respect of the instalments of principal.

Registered Instruments

1.08 In respect of each Tranche of Instruments issued in registered form, the Issuer will deliver to each Holder of such Instruments a Registered Instrument which will be recorded in the register which the Issuer shall procure to be kept by the Registrar (as defined in Condition 2.02). Registered Instruments will be in substantially the form (subject to amendment and completion) scheduled to the Issue and Paying Agency Agreement. Instruments issued in registered form will not be represented upon issue by a Temporary Global Instrument and Registered Instruments will not be exchangeable for Bearer Instruments.

Denomination

Denomination of Bearer Instruments

1.09 Bearer Instruments are in the denomination or denominations (each of which denomination is integrally divisible by each smaller denomination) specified in the Final Terms, subject to (in the case of Bearer Instruments represented by either a Temporary Global Instrument or a Permanent Global Instrument) a minimum denomination of €50,000 and integral multiples thereof. Bearer Instruments of one denomination may not be exchanged for Bearer Instruments of any other denomination. Bearer Instruments which are represented by Definitive Instruments will be subject to a minimum denomination of €50,000.

Denomination of Registered Instruments

1.10 Registered Instruments are in the minimum denomination specified in the Final Terms, subject to a minimum denomination of €50,000, or integral multiples thereof.

Currency of Instruments

1.11 The Instruments are denominated in such currency as may be specified in the Final Terms, subject to compliance with all applicable legal and/or regulatory and/or central bank requirements.

Partly Paid Instruments

1.12 Instruments may be issued on a partly paid basis ("Partly Paid Instruments") if so specified in the Final Terms. The subscription moneys therefor shall be paid in such number of instalments ("Partly Paid Instalments") in such amounts, on such dates and in such manner as may be specified in the Final Terms. The first such instalment shall be due and payable on the date of issue of the Instruments. For the purposes of these Terms and Conditions, in respect of any Partly Paid Instrument, the aggregate amount of all Partly Paid Instalments in respect thereof as shall have fallen due and been paid up in full in accordance with the Terms and Conditions shall be referred to as the "Paid Up Amount".

No fewer than fourteen days nor more than thirty days prior to the due date for payment of any Partly Paid Instalment (other than the first such Instalment) the Issuer shall publish a notice in accordance with Condition 14 stating the due date for payment thereof and stating that failure to pay any such Partly Paid Instalment on any Instrument on or prior to such date will entitle the Issuer to declare that the Holder of such Instrument shall have forfeited the Instrument with effect from such date ("Forfeiture Date") as may be specified in such notice (not being less than fourteen days after the due date for payment of such Partly Paid Instalment), unless payment of the relevant Partly Paid Instalment together with any interest accrued thereon is paid prior to the Forfeiture Date. The Issuer shall procure that any Partly Paid Instalments paid in respect of any

16

Instruments subsequent to the Forfeiture Date in respect thereof shall be returned promptly to the persons entitled thereto. The Issuer shall not be liable for any interest on any Partly Paid Instalment so returned.

Interest shall accrue on any Partly Paid Instalment which is not paid on or prior to the due date for payment thereof at the Interest Rate (in the case of non-interest bearing Instruments, at the rate applicable to overdue payments) and shall be calculated in the same manner and on the same basis as if it were interest accruing on the Instruments for the period from and including the due date for payment of the relevant Partly Paid Instalment up to but excluding the Forfeiture Date. For the purpose of the accrual of interest, any payment of any Partly Paid Instalment made after the due date for payment shall be treated as having been made on the day preceding the Forfeiture Date (whether or not a Business Day as defined in Condition 5.09).

Unless an Event of Default (as defined in Condition 7.01) shall have occurred and be continuing, on the Forfeiture Date, the Issuer shall cancel all of the Instruments in respect of which any Partly Paid Instalment shall not have been duly paid, whereupon the Issuer shall be entitled to retain all Partly Paid Instalments previously paid in respect of such Instruments and shall be discharged from any obligation to repay such amount or to pay interest thereon, or (where such Instruments are represented by a Temporary Global Instrument or a Permanent Global Instrument) to exchange any interests in such Instrument for interests in a Permanent Global Instrument or to deliver Definitive Instruments or Registered Instruments in respect thereof, but shall have no other rights against any person entitled to the Instruments which have been so cancelled.

Without prejudice to the right of the Issuer to cancel any Instruments, for so long as any Partly Paid Instalment remains due but unpaid, and except in the case where an Event of Default shall have occurred and be continuing (a) no interests in a Temporary Global Instrument may be exchanged for interests in a Permanent Global Instrument and (b) no transfers of Registered Instruments or exchanges of Bearer Instruments for Registered Instruments may be requested or effected.

Until such time as all the subscription moneys in respect of Partly Paid Instruments shall have been paid in full and except in the case where an Event of Default shall have occurred and be continuing or if any of Euroclear or Clearstream, Luxembourg or any other relevant clearing system is closed for business for a continuous period of fourteen days (other than by reason of public holidays) or announces an intention to cease business permanently or in fact does so, no interests in a Temporary Global Instrument or a Permanent Global Instrument may be exchanged for Definitive Instruments or Registered Instruments.

2. Title and Transfer

2.01 Title to Bearer Instruments, Receipts and Coupons passes by delivery. References herein to the "Holders" of Bearer Instruments or of Receipts or Coupons are to the bearers of such Bearer Instruments or such Receipts or Coupons. For so long as any of the Instruments is represented by a Temporary Global Instrument or a Permanent Global Instrument held on behalf of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system, each person who is shown in the records of Euroclear or Clearstream, Luxembourg or any other relevant clearing system as entitled to a particular nominal amount of Instruments by way of an interest in a Temporary Global Instrument or Permanent Global Instrument will be treated by the Issuer, the Fiscal Agent and any Paying Agent as the holder of such nominal amount of Instruments, and the expression "Holders" shall be construed accordingly. Instruments which are represented by a Temporary Global Instrument and/or a Permanent Global Instrument will be transferable only in accordance with the then-current rules and procedures of Euroclear and Clearstream, Luxembourg, as the case may be. References to Euroclear and/or Clearstream, Luxembourg shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearing system approved by the Issuer and the Fiscal Agent.

2.02 Title to Registered Instruments passes by registration in the register which the Issuer shall procure to be kept by the Registrar. For the purposes of these Terms and Conditions, "Registrar" means, in relation to any Series comprising Registered Instruments, the Principal Registrar, the First Alternative Registrar or, as the case may be, the Second Alternative Registrar, as specified in the Final Terms provided, however, that in the case of Instruments which are intended to be listed on the Luxembourg Stock Exchange, the Registrar will have its specified office in Luxembourg. References herein to the "Holders" of Registered Instruments are to the persons in whose names such Registered Instruments are so registered in the relevant register.

2.03 The Holder of any Bearer Instrument, Coupon or Registered Instrument will (except as otherwise required by applicable law or regulatory requirement) be treated as its absolute owner for all purposes

17

(whether or not it is overdue and regardless of any notice of ownership, trust or any interest thereof or therein, any writing thereon, or any theft or loss thereof) and no person shall be liable for so treating such Holder.

Transfer of Registered Instruments and exchange of Bearer Instruments for Registered Instruments

2.04 A Registered Instrument may, upon the terms and subject to the conditions set forth in the Issue and Paying Agency Agreement, be transferred in whole or in part only (provided that such part is, or is an integral multiple of, the minimum denomination specified in the Final Terms) upon the surrender of the Registered Instrument to be transferred, together with the form of transfer endorsed on it duly completed and executed, at the specified office of the Registrar. A new Registered Instrument will be issued to the transferee and, in the case of a transfer of part only of a Registered Instrument, a new Registered Instrument in respect of the balance not transferred will be issued to the transferor.

2.05 Registered Instruments may not be exchanged for Bearer Instruments. However, if so specified in the Final Terms, the Holder of Bearer Instruments may exchange the same for the same aggregate principal amount of Registered Instruments upon the terms and subject to the conditions set forth in the Issue and Paying Agency Agreement and the Final Terms. In order to exchange a Bearer Instrument for a Registered Instrument, the Holder thereof shall surrender such Bearer Instrument at the specified office outside the United States of the Fiscal Agent or of the Registrar together with a written request for the exchange. Each Bearer Instrument so surrendered must be accompanied by all unmatured Receipts and Coupons appertaining thereto other than the Coupon in respect of the next payment of interest falling due after the exchange date (as defined in Condition 2.06) where the exchange date would, but for the provisions of Condition 2.06, occur between the Record Date (as defined in Condition 9B.03) for such payment of interest and the date on which such payment of interest falls due.

2.06 Each new Registered Instrument to be issued upon the transfer of a Registered Instrument or the exchange of a Bearer Instrument for a Registered Instrument will, within three Relevant Banking Days of the transfer date or, as the case may be, the exchange date be available for collection by each relevant Holder at the specified office of the Registrar or, at the option of the Holder requesting such exchange or transfer be mailed (by uninsured post at the risk of the Holder(s) entitled thereto) to such address(es) as may be specified by such Holder. For these purposes, a form of transfer or request for exchange received by the Registrar or the Fiscal Agent after the Record Date in respect of any payment due in respect of Registered Instruments shall be deemed not to be effectively received by the Registrar or the Fiscal Agent until the day following the due date for such payment.

For the purposes of these Terms and Conditions,

(i) "Relevant Banking Day" means a day (other than a Saturday or Sunday) on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in the place where the specified office of the Registrar is located and, in the case only of an exchange of a Bearer Instrument for a Registered Instrument where such request for exchange is made to the Fiscal Agent, in the place where the specified office of the Fiscal Agent is located;

(ii) the "exchange date" shall be the Relevant Banking Day following the day on which the relevant Bearer Instrument shall have been surrendered for exchange in accordance with Condition 2.05; and

(iii) the "transfer date" shall be the Relevant Banking Day following the day on which the relevant Registered Instrument shall have been surrendered for transfer in accordance with Condition 2.04.

2.07 The issue of new Registered Instruments on transfer or on the exchange of Bearer Instruments for Registered Instruments will be effected without charge by or on behalf of the Issuer, the Fiscal Agent or the Registrar, but upon payment by the applicant of (or the giving by the applicant of such indemnity as the Issuer, the Fiscal Agent or the Registrar may require in respect of) any tax, duty or other governmental charges which may be imposed in relation thereto.

2.08 Upon the transfer, exchange or replacement of Registered Instruments bearing the private placement legend (the "Private Placement Legend") set forth in the form of Registered Instrument scheduled

18

to the Issue and Paying Agency Agreement, the Registrar shall deliver only Registered Instruments that also bear such legend unless either (i) such transfer, exchange or replacement occurs three or more years after the later of (1) the original issue date of such Instruments or (2) the last date on which the Issuer or any affiliates (as defined below) of the Issuer as notified to the Registrar by the Issuer as provided in the following sentence, was the beneficial owner of such Instrument (or any predecessor of such Instrument) or (ii) there is delivered to the Registrar an opinion reasonably satisfactory to the Issuer of counsel experienced in giving opinions with respect to questions arising under the securities laws of the United States to the effect that neither such legend nor the restrictions on transfer set forth therein are required in order to maintain compliance with the provisions of such laws. The Issuer covenants and agrees that it will not acquire any beneficial interest, and will cause its "affiliates" (as defined in paragraph (a)(1) of Rule 144 under the United States Securities Act of 1933, as amended, (the "Securities Act")) not to acquire any beneficial interest, in any Registered Instrument bearing the Private Placement Legend unless it notifies the Registrar of such acquisition. The Registrar and all Holders shall be entitled to rely without further investigation on any such notification (or lack thereof).

2.09 For so long as any of the Registered Instruments bearing the Private Placement Legend remain outstanding and are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, the Issuer covenants and agrees that it shall, during any period in which it is not subject to Section 13 or 15(d) under the United States Securities Exchange Act of 1934, as amended, (the "Exchange Act") nor exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, make available to any Holder of such Instruments in connection with any sale thereof and any prospective purchaser of such Instruments from such Holder, in each case upon request, the information specified in, and meeting the requirements of, Rule 144 under the Securities Act.

3. Status of the Instruments

The Instruments constitute direct, unconditional, unsubordinated and (subject to Negative Pledge provisions of Condition 4) unsecured obligations of the Issuer and rank pari passu without any preference among themselves and at least pari passu with all other unsubordinated and unsecured obligations of the Issuer, present and future (save for certain mandatory exceptions provided by law). The Instruments are not savings accounts or deposits, and are not obligations of, guaranteed or insured by, any United States or foreign regulatory agency or authority.

4. Negative Pledge

HSBC Finance will not issue, assume or guarantee any indebtedness for borrowed money (referred to as "indebtedness", which term shall not include any guarantee, cash deposit or other recourse obligation in connection with the sale, securitization or discount by HSBC Finance of finance or accounts receivables, trade acceptances or other paper arising in the ordinary course of its business) secured by a mortgage, security interest, pledge or lien (referred to as "mortgage" or "mortgages") of or upon any property of HSBC Finance, now owned or hereafter acquired, unless the Instruments then outstanding are effectively secured by such mortgage equally and rateably with (or at the option of HSBC Finance, prior to) all other indebtedness secured thereby for so long as such other indebtedness shall be so secured.

The foregoing covenant, however, will not apply to (a) mortgages on any property acquired, constructed or improved by, or on any shares of capital stock or indebtedness acquired by, HSBC Finance after the date of the Issue and Paying Agency Agreement (i) to secure the payment of all or any part of the purchase price of such property, shares of capital stock or indebtedness upon the acquisition thereof by HSBC Finance, or (ii) to secure any indebtedness issued, assumed or guaranteed by HSBC Finance prior to, at the time of, or within 360 days after (x) in the case of property, the later of the acquisition, completion of construction (including any improvements on existing property) or commencement of commercial operation of such property or (y) in the case of shares of capital stock or indebtedness, the acquisition of such shares of capital stock or indebtedness, which indebtedness is issued, assumed or guaranteed for the purpose of financing or refinancing all or any part of the purchase price of such property, shares of capital stock or indebtedness and, in the case of property, the cost of construction thereof or improvements thereon, provided that in the case of any such acquisition, construction or improvement of property, the mortgage shall not apply to any property, shares of capital stock or indebtedness theretofore owned by HSBC Finance other than, in the case of any such construction or improvement, any theretofore unimproved or substantially unimproved real property on which the property so constructed or the improvement is located; (b) mortgages on any property, shares of capital stock or indebtedness, which mortgages exist at the time of acquisition by HSBC Finance; (c) mortgages on any property of a corporation, which mortgages exist at the time such corporation merges or consolidates with or

19

into HSBC Finance or which mortgages exist at the time of a sale or transfer of all or substantially all of the assets of such corporation to HSBC Finance; (d) mortgages to secure any indebtedness of HSBC Finance to any subsidiary, or the indebtedness of, or performance of obligations by, one of its subsidiaries to another subsidiary; (e) mortgages in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, or in favor of any other country or political subdivision, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred or guaranteed for the purpose of financing or refinancing all or any part of the purchase price of the property, shares of capital stock or indebtedness subject to such mortgages, or the cost of construction or improvement of the property subject to such mortgages; (f) mortgages on properties financed through tax-exempt municipal obligations; provided that such mortgages are limited to the property so financed; (g) mortgages existing on the date of execution of the Issue and Paying Agency Agreement; and (h) any extension, renewal, refunding or replacement (or successive extensions, renewals, refundings or replacements), in whole or in part, of any mortgage existing at the date of the Issue and Paying Agency Agreement referred to in the foregoing clauses (a) through (g), inclusive; provided, however, that the principal amount of indebtedness secured thereby does not exceed the principal amount of indebtedness secured at the time by such extension, renewal, refunding or replacement; provided, further, that such extension, renewal, refunding or replacement of such mortgage is limited to all or a part of the property, shares of capital stock or indebtedness subject to such mortgage so extended, renewed, refunded or replaced.

Notwithstanding the foregoing, HSBC Finance may, without equally and rateably securing the Instruments, issue, assume or guarantee indebtedness secured by a mortgage not excepted by clauses (a) through (h) of the preceding paragraph, if the aggregate amount of such indebtedness, together with all other indebtedness of, or guaranteed by, HSBC Finance existing at such time and secured by mortgages not so excepted, does not at the time exceed 10% of HSBC Finance's Consolidated Net Worth. As used herein, "HSBC Finance's Consolidated Net Worth" shall be the difference between HSBC Finance's consolidated assets and consolidated liabilities as shown on HSBC Finance's most recent audited consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America. In addition, an arrangement with any person providing for the leasing by HSBC Finance of any property, which property has been or is to be sold or transferred by HSBC Finance to such person with the intention that such property be leased back to HSBC Finance, shall not be deemed to create any indebtedness secured by a mortgage if the obligations in respect of such lease would not be included as liabilities on a consolidated balance sheet of HSBC Finance.

5. Interest

Interest

5.01 Instruments may be interest-bearing or non interest-bearing, as specified in the Final Terms. Words and expressions appearing in this Condition 5 and not otherwise defined herein or in the Final Terms shall have the meanings given to them in Condition 5.09.

Interest-bearing Instruments

5.02 Instruments which are specified in the Final Terms as being interest-bearing shall bear interest on their Outstanding Principal Amount from and including their Interest Commencement Date at the Interest Rate payable in arrears on each Interest Payment Date.

Floating Rate Instruments

5.03 If the Final Terms specifies the Interest Rate applicable to the Instruments as being Floating Rate, it shall also specify which page (the "Relevant Screen Page") on the Reuters Screen or Telerate or any other information vending service shall be applicable. If such a page is so specified, the Interest Rate applicable to the relevant Instruments for each Interest Accrual Period shall be determined by the Calculation Agent on the following basis:

(i) the Calculation Agent will determine the offered rate for deposits (or, as the case may require, the arithmetic mean (rounded, if necessary, to the nearest ten thousandth of a percentage point, 0.00005 being rounded upwards) of the rates for deposits) in the relevant currency for a period of the duration of the relevant Interest Accrual Period on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

20

(ii) if, on any Interest Determination Date, no such rate for deposits so appears (or, as the case may be, if fewer than two such rates for deposits so appear) or if the Relevant Screen Page is unavailable, the Calculation Agent will request appropriate quotations and will determine the arithmetic mean (rounded as aforesaid) of the rates at which deposits in the relevant currency are offered by four major banks in the London interbank market (or, in the case of Instruments denominated or payable in euro, the euro zone interbank market), selected by the Calculation Agent, at approximately the Relevant Time on the Interest Determination Date to prime banks in the London interbank market (or, in the case of Instruments denominated or payable in euro, the euro zone interbank market) for a period of the duration of the relevant Interest Accrual Period and in an amount that is representative for a single transaction in the relevant market at the relevant time;

(iii) if, on any Interest Determination Date, only two or three rates are so quoted, the Calculation Agent will determine the arithmetic mean (rounded as aforesaid) of the rates so quoted; or

(iv) if fewer than two rates are so quoted, the Calculation Agent will determine the arithmetic mean (rounded as aforesaid) of the rates quoted by four major banks in the Relevant Financial Center (or, in the case of Instruments denominated in euro, in such financial centre or centres within the euro zone) selected by the Calculation Agent, at approximately 11.00 a.m. (Relevant Financial Center time (or local time at such other financial centre or centres as aforesaid)) on the first day of the relevant Interest Accrual Period for loans in the relevant currency to leading European banks for a period for the duration of the relevant Interest Accrual Period and in an amount that is representative for a single transaction in the relevant market at the relevant time,

and the Interest Rate applicable to such Instruments during each Interest Accrual Period will be the sum of the relevant margin (the "Relevant Margin") specified in the Final Terms and the rate (or, as the case may be, the arithmetic mean (rounded as aforesaid) of the rates) so determined provided, however, that, if the Calculation Agent is unable to determine a rate (or, as the case may be, an arithmetic mean of rates) in accordance with the above provisions in relation to any Interest Accrual Period, the Interest Rate applicable to such Instruments during such Interest Accrual Period will be the sum of the Relevant Margin and the rate (or, as the case may be, the arithmetic mean (rounded as aforesaid) of the rates) determined in relation to such Instruments in respect of the last preceding Interest Accrual Period.

ISDA Rate Instruments

5.04 If the Final Terms specifies the Interest Rate applicable to the Instruments as being ISDA Rate, each Instrument shall bear interest at the relevant ISDA Rate plus or minus (as indicated in the applicable Final Terms) the Margin (if any). For the purposes of this Condition 5.04, "ISDA Rate" for an Interest Period means a rate equal to the Floating Rate that would be determined by the applicable calculation agent under an interest rate swap transaction if the applicable calculation agent were acting as Calculation Agent for that swap transaction under the terms of an agreement incorporating the ISDA Definitions and under which:

(i) the Floating Rate Option is as specified in the applicable Final Terms;

(ii) the Designated Maturity is a period specified in the applicable Final Terms;

(iii) the relevant Reset Date is either (a) if the applicable Floating Rate Option is based on the London inter-bank offered rate ("LIBOR") or on the Euro-zone inter-bank offered rate ("EURIBOR"), the first day of that Interest Period or (ii) in any other case, as specified in the applicable Final Terms.

For the purposes of this Condition 5.04, "Euro-zone" means the region comprised of member states of the European Union that adopt the single currency in accordance with the Treaty establishing the European Communities, as amended by the Treaty on European Union and the Treaty of Amsterdam and the definitions of "Floating Rate", "Calculation Agent", "Floating Rate Option", "Designated Maturity" and "Reset Date" have the respective meanings given to those terms in the ISDA Definitions.

21

Maximum or Minimum Interest Rate

5.05 If any Maximum or Minimum Interest Rate is specified in the Final Terms, then the Interest Rate shall in no event be greater than the maximum or be less than the minimum so specified.

Accrual of Interest

5.06 Interest shall accrue on the Outstanding Principal Amount of each Instrument during each Interest Accrual Period from the Interest Commencement Date. Interest will cease to accrue as from the due date for redemption therefor (or, in the case of an Instalment Instrument, in respect of each instalment of principal, on the due date for payment of the relevant Instalment Amount) unless upon due presentation or surrender thereof (if required), payment in full of the Redemption Amount (as defined in Condition 6.10) or the relevant Instalment Amount is improperly withheld or refused or default is otherwise made in the payment thereof in which case interest shall continue to accrue on the principal amount in respect of which payment has been improperly withheld or refused or default has been made (as well after as before any demand or judgment) at the Interest Rate then applicable or such other rate as may be specified for this purpose in the Final Terms until the date on which, upon due presentation or surrender of the relevant Instrument (if required), the relevant payment is made or, if earlier (except where presentation or surrender of the relevant Instrument is not required as a precondition of payment), the seventh day after the date on which, the Fiscal Agent or, as the case may be, the Registrar having received the funds required to make such payment, notice is given to the Holders of the Instruments in accordance with Condition 14 that the Fiscal Agent or, as the case may be, the Registrar has received the required funds (except to the extent that there is failure in the subsequent payment thereof to the relevant Holder).

Interest Amount(s), Calculation Agent and Reference Banks

5.07 If a Calculation Agent is specified in the Final Terms, the Calculation Agent, as soon as practicable after the Relevant Time on each Interest Determination Date (or such other time on such date as the Calculation Agent may be required to calculate any Redemption Amount or Instalment Amount, obtain any quote or make any determination or calculation) will determine the Interest Rate and calculate the amount(s) of interest payable (the "Interest Amount(s)") in respect of each Denomination of the Instruments (in the case of Bearer Instruments) and the minimum denomination (in the case of Registered Instruments) for the relevant Interest Accrual Period, calculate the Redemption Amount or Instalment Amount, obtain such quote or make such determination or calculation, as the case may be, and cause the Interest Rate and the Interest Amounts for each Interest Period and the relevant Interest Payment Date or, as the case may be, the Redemption Amount or any Instalment Amount to be notified to the Fiscal Agent, the Registrar (in the case of Registered Instruments), the Issuer, the Holders in accordance with Condition 14 and, if the Instruments are listed and/or admitted to trading on or by any stock exchange and/or market and the rules of such exchange and/or market so require, such exchange and/or market as soon as possible after their determination or calculation but in no event later than the fourth London Banking Day thereafter or, if earlier in the case of notification to the stock exchange and/or market the time required by the rules of the relevant stock exchange. The Interest Amounts and the Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without notice in the event of an extension or shortening of an Interest Accrual Period or the Interest Period. If the Instruments become due and payable under Condition 7, the Interest Rate and the accrued interest payable in respect of the Instruments shall nevertheless continue to be calculated as previously in accordance with this Condition but no publication of the Interest Rate or the Interest Amount so calculated need be made. The determination of each Interest Rate, Interest Amount, Redemption Amount and Instalment Amount, the obtaining of each quote and the making of each determination or calculation by the Calculation Agent shall (in the absence of manifest error) be final and binding upon the Issuer and the Holders and neither the Calculation Agent nor any Reference Bank shall have any liability to the Holders in respect of any determination, calculation, quote or rate made or provided by it.

The Issuer will procure that there shall at all times be such Reference Banks as may be required for the purpose of determining the Interest Rate applicable to the Instruments and a Calculation Agent, if provision is made for one in the Terms and Conditions.

If the Calculation Agent is incapable or unwilling to act as such or if the Calculation Agent fails duly to establish the Interest Rate for any Interest Accrual Period or to calculate the Interest Amounts or any other requirements, the Issuer will appoint the London office of a leading bank engaged in the London interbank

22

market to act as such in its place. The Calculation Agent may not resign its duties without a successor having been appointed as aforesaid.

Calculations and Adjustments

5.08 The amount of interest payable in respect of any Instrument for any period shall be calculated by multiplying the product of the Interest Rate and the Outstanding Principal Amount by the Day Count Fraction, save that if the Final Terms specifies a specific amount in respect of such period, the amount of interest payable in respect of such Instrument for such period will be equal to such specified amount. Where any Interest Period comprises two or more Interest Accrual Periods, the amount of interest payable in respect of such Interest Period will be the sum of the amounts of interest payable in respect of each of those Interest Accrual Periods.

For the purposes of any calculations referred to in these Terms and Conditions (unless otherwise specified in the Final Terms), (a) all percentages resulting from such calculations will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with 0.000005 per cent. being rounded up to 0.00001 per cent.), (b) all United States Dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one half cent being rounded up), (c) all Japanese Yen amounts used in or resulting from such calculations will be rounded downwards to the next lower whole Japanese Yen amount and (d) all amounts denominated in any other currency used in or resulting from such calculations will be rounded to the nearest two decimal places in such currency, with 0.005 being rounded upwards.

Definitions

5.09 Unless otherwise noted in a Final Terms:

"Applicable Business Day Convention" means the "Business Day Convention" which may be specified in the Final Terms as applicable to any date in respect of the Instruments unless the Final Terms specifies "No Adjustment" in relation to any date in which case such date shall not be adjusted in accordance with any Business Day Convention. Different Business Day Conventions may apply, or be specified in relation to, the Interest Payment Dates, Interest Period End Dates and any other date or dates in respect of any Instruments.

"Banking Day" means, in respect of any city, any day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in that city.

"Business Day" means a day (other than a Saturday or Sunday):

(i) in relation to Instruments denominated or payable in euro, on which the TARGET System is open;

(ii) in relation to Instruments payable in any other currency, on which commercial banks are open for business and foreign exchange markets settle payments in the Relevant Financial Centre in respect of the relevant currency; and

(iii) in either case, on which commercial banks are open for business and foreign exchange markets settle payments in any place specified in the relevant Final Terms.

"Business Day Convention" means a convention for adjusting any date if it would otherwise fall on a day that is not a Business Day and the following Business Day Conventions, where specified in the Final Terms in relation to any date applicable to any Instruments, shall have the following meanings:

(i) "Following Business Day Convention" means that such date shall be postponed to the first following day that is a Business Day;

(ii) "Modified Following Business Day Convention" or "Modified Business Day Convention" means that such date shall be postponed to the first following day that is a Business Day unless that day falls in the next calendar month in which case that date will be the first preceding day that is a Business Day;

23

(iii) "Preceding Business Day Convention" means that such date shall be brought forward to the first preceding day that is a Business Day; and

(iv) "FRN Convention" or "Eurodollar Convention" means that each such date shall be the date which numerically corresponds to the preceding such date in the calendar month which is the number of months specified in the Final Terms after the calendar month in which the preceding such date occurred provided that:

(a) if there is no such numerically corresponding day in the calendar month in which any such date should occur, then such date will be the last day which is a Business Day in that calendar month;

(b) if any such date would otherwise fall on a day which is not a Business Day, then such date will be the first following day which is a Business Day unless that day falls in the next calendar month, in which case it will be the first preceding day which is a Business Day; and

(c) if the preceding such date occurred on the last day in a calendar month which was a Business Day, then all subsequent such dates will be the last day which is a Business Day in the calendar month which is the specified number of months after the calendar month in which the preceding such date occurred.

"Calculation Agent" means such agent as may be specified in the Final Terms as the Calculation Agent.

"Day Count Fraction" means, in respect of the calculation of an amount of interest for any period of time ("Calculation Period"), such day count fraction as may be specified in the Final Terms and:

(i) if "Actual/365" or "Actual/Actual (ISDA)" is so specified, means the actual number of days in the Calculation Period divided by 365 (or, if any portion of the Calculation Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365);

(ii) if "Actual/365 (Fixed)" is so specified, means the actual number of days in the Calculation Period divided by 365;

(iii) if "Actual/360" is so specified, means the actual number of days in the Calculation Period divided by 360;

(iv) if "30/360", "360/360" or "Bond Basis" is so specified, means the number of days in the Calculation Period divided by 360 (the number of days to be calculated on the basis of a year of 360 days with 12 30-day months (unless (i) the last day of the Calculation Period is the 31st day of a month but the first day of the Calculation Period is a day other than the 30th or 31st day of a month, in which case the month that includes the last day shall not be considered to be shortened to a 30-day month, or (ii) the last day of the Calculation Period is the last day of the month of February, in which case the month of February shall not be considered to be lengthened to a 30-day month));

(v) if "30E/360" or "Eurobond Basis" is so specified means, the number of days in the Calculation Period divided by 360 (the number of days to be calculated on the basis of a year of 360 days with 12 30-day months, without regard to the date of the first day or last day of the Calculation Period unless, in the case of the final Calculation Period, the date of final maturity is the last day of the month of February, in which case the month of February shall not be considered to be lengthened to a 30-day month); and

(vi) if "Actual/Actual (ISMA)" is so specified, means:

(a) where the Calculation Period is equal to or shorter than the Regular Period during which it falls, the actual number of days in the Calculation Period divided by the

24

product of (1) the actual number of days in such Regular Period and (2) the number of Regular Periods normally ending in any year; and

(b) where the Calculation Period is longer than one Regular Period, the sum of:

(A) the actual number of days in such Calculation Period falling in the Regular Period in which it begins divided by the product of (1) the actual number of days in such Regular Period and (2) the number of Regular Periods in any year; and

(B) the actual number of days in such Calculation Period falling in the next Regular Period divided by the product of (1) the actual number of days in such Regular Period and (2) the number of Regular Periods normally ending in any year;

"euro zone" means the zone comprising the Member States of the European Union which adopt or have adopted the euro as their lawful currency in accordance with the Treaty (as defined below).

"Interest Accrual Period" means, in respect of an Interest Period, each successive period beginning on and including an Interest Period End Date and ending on but excluding the next succeeding Interest Period End Date during that Interest Period provided always that the first Interest Accrual Period shall commence on and include the Interest Commencement Date and the final Interest Accrual Period shall end on but exclude the date of final maturity.

"Interest Commencement Date" means the date of issue of the Instruments (as specified in the Final Terms) or such other date as may be specified as such in the Final Terms.

"Interest Determination Date" means, in respect of any Interest Accrual Period, the date falling such number (if any) of Banking Days in such city(ies) as may be specified in the Final Terms prior to the first day of such Interest Accrual Period, or if none is specified:

(i) in the case of Instruments denominated in Sterling, the first day of such Interest Accrual Period; or

(ii) in the case of instruments denominated or payable in euro the date falling two TARGET Business Days prior to the first day of such Interest Accrual Period

(iii) in any other case, the date falling two London Banking Days prior to the first day of such Interest Accrual Period.

"Interest Payment Date" means the date or dates specified as such in, or determined in accordance with the provisions of, the Final Terms and, if an Applicable Business Day Convention is specified in the Final Terms, as the same may be adjusted in accordance with the Applicable Business Day Convention or if the Applicable Business Day Convention is the FRN Convention and an interval of a number of calendar months is specified in the Final Terms as being the Interest Period, each of such dates as may occur in accordance with the FRN Convention at such specified period of calendar months following the date of issue of the Instruments (in the case of the first Interest Payment Date) or the previous Interest Payment Date (in any other case).

"Interest Period" means each successive period beginning on and including an Interest Payment Date and ending on but excluding the next succeeding Interest Payment Date provided always that the first Interest Period shall commence on and include the Interest Commencement Date and the final Interest Period shall end on but exclude the date of final maturity.

"Interest Period End Date" means the date or dates specified as such in, or determined in accordance with the provisions of, the Final Terms and, if an Applicable Business Day Convention is specified in the Final Terms, as the same may be adjusted in accordance with the Applicable Business Day Convention or, if the Applicable Business Day Convention is the FRN Convention and an interval of a number of calendar months is specified in the Final Terms as the Interest Accrual Period, such dates as may occur in accordance with the FRN Convention at such specified period of calendar months following the Interest Commencement Date (in the case of the first Interest Period End Date) or the previous Interest Period End Date (in any other case) or, if none of

25

the foregoing is specified in the Final Terms, means the date or each of the dates which correspond with the Interest Payment Date(s) in respect of the Instruments.

"Interest Rate" means the rate or rates (expressed as a percentage per annum) or amount or amounts (expressed as a price per unit of relevant currency) of interest payable in respect of the Instruments specified in, or calculated or determined in accordance with the provisions of, the Final Terms.

"ISDA Definitions" means the 2000 ISDA Definitions, as amended and updated as at the date of issue of the first Tranche of the Instruments of the relevant Series (as specified in the Final Terms) as published by the International Swaps and Derivatives Association, Inc. (formerly the International Swap Dealers Association, Inc.).

"Outstanding Principal Amount" means, in respect of an Instrument, its principal amount less, in respect of any Instalment Instrument, any principal amount on which interest shall have ceased to accrue in accordance with Condition 5.06 or, in the case of a Partly Paid Instrument, the Paid Up Amount of such Instrument or otherwise as indicated in the Final Terms.

"Reference Banks" means such banks as may be specified in the Final Terms as the Reference Banks or, if none are specified, "Reference Banks" has the meaning given in the ISDA Definitions, mutatis mutandis.

"Regular Period" means:

(i) in the case of Instruments where interest is scheduled to be paid only by means of regular payments, each period from and including the Interest Commencement Date to but excluding the first Interest Payment Date and each successive period from and including one Interest Payment Date to but excluding the next Interest Payment Date;

(ii) in the case of Instruments where, apart from the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where "Regular Date" means the day and month (but not the year) on which any Interest Payment Date falls; and

(iii) in the case of Instruments where, apart from one Interest Period other than the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where "Regular Date" means the day and month (but not the year) on which any Interest Payment Date falls other than the Interest Payment Date falling at the end of the irregular Interest Period.

"Relevant Financial Center" means such financial center or centers as may be specified in relation to the relevant currency for the purposes of the definition of "Business Day" in the ISDA Definitions.

"Relevant Time" means the time as of which any rate is to be determined as specified in the Final Terms or, if none is specified, at which it is customary to determine such rate.

"Reuters Screen" means, when used in connection with a designated page and any designated information, the display page so designated on the Reuters Monitor Money Rates Service (or such other page as may replace that page on that service for the purpose of displaying such information).

"Target System" means the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System.

"Telerate" means, when used in connection with any designated page and any designated information, the display page so designated on the Moneyline Telerate Service (or such other page as may replace that page on that service, or such other service as may be nominated as the information vendor, for the purpose of displaying such information).

"Treaty" means the Treaty establishing the European Communities, as amended by the Treaty on European Union and the Treaty of Amsterdam.

26

Non-Interest Bearing Instruments

5.10 If any Maturity Redemption Amount (as defined in Condition 6.01) in respect of any Instrument which is non-interest bearing is not paid when due, interest shall accrue on the overdue amount at a rate per annum (expressed as a percentage per annum) equal to the Amortization Yield defined in, or determined in accordance with the provisions of, the Final Terms or at such other rate as may be specified for this purpose in the Final Terms until the date on which, upon due presentation or surrender of the relevant Instrument (if required), the relevant payment is made or, if earlier (except where presentation or surrender of the relevant Instrument is not required as a precondition of payment), the seventh day after the date on which, the Fiscal Agent or, as the case may be, the Registrar having received the funds required to make such payment, notice is given to the Holders of the Instruments in accordance with Condition 14 that the Fiscal Agent or, as the case may be, the Registrar has received the required funds (except to the extent that there is failure in the subsequent payment thereof to the relevant Holder). The amount of any such interest shall be calculated in accordance with the provisions of Condition 5.08 as if the Interest Rate was the Amortization Yield, the Outstanding Principal Amount was the overdue sum and the Day Count Fraction was as specified for this purpose in the Final Terms or, if not so specified, 30E/360 (as defined in Condition 5.09).

6. Redemption and Purchase

Redemption at Maturity

6.01 Unless previously redeemed, or purchased and cancelled, each Instrument shall be redeemed at its maturity redemption amount (the "Maturity Redemption Amount") (which shall be its Outstanding Principal Amount or such other redemption amount as may be specified in or determined in accordance with the Final Terms) (or, in the case of Instalment Instruments, in such number of instalments and in such amounts ("Instalment Amounts") as may be specified in, or determined in accordance with the provisions of, the Final Terms) on the date or dates (or, in the case of Instruments which bear interest at a floating rate of interest, on the date or dates upon which interest is payable) specified in the Final Terms; provided that, in the case of any Series of Instruments listed on the regulated market of the Luxembourg Stock Exchange, the Maturity Amount will be 100 per cent. of its Outstanding Principal Amount.

Early Redemption for Taxation Reasons

6.02 Unless specified otherwise in the relevant Final Terms, if, in relation to any Series of Instruments:

(i) as a result of any change in the laws, regulations or rulings of the United States or of any political subdivision thereof or any authority or agency therein or thereof having power to tax or in the interpretation or administration of any such laws, regulations or rulings which becomes effective on or after the date of issue of such Instruments or any other date specified in the Final Terms, the Issuer would be required to pay additional amounts as provided in Condition 8, and such obligation cannot be avoided by the Issuer taking reasonable measures available to it; or

(ii) if the Issuer shall determine that any payment made outside the United States by the Issuer or any Paying Agents in respect of any Bearer Instrument or Coupon appertaining thereto would, under any present or future laws or regulations of the United States affecting taxation or otherwise, be subject to any certification, information or other reporting requirement with regard to the nationality, residence or identity of a beneficial owner of such Bearer Instrument or Coupon who is a United States Alien (as defined in Condition 8) (other than a requirement that (A) would not be applicable to a payment made (x) directly to the beneficial owner or (y) to a custodian, nominee or other agent of the beneficial owner, or (B) could be satisfied by the holder, custodian, nominee or other agent certifying that the beneficial owner is not a United States person, provided, however, that in each case referred to in (A)(y) or (B) payment by any such custodian, nominee or agent to the beneficial owner is not otherwise subject to any requirement referred to in this sentence or (C) would not be applicable to a payment made by at least one paying agent); and

(iii) in the case of (i) or (ii) above, such circumstances are evidenced by the delivery by the Issuer to the Fiscal Agent of a certificate signed by two officers of the Issuer stating that the said

27

circumstances prevail and describing the facts leading thereto and an opinion of independent legal advisers of recognized standing to the effect that such circumstances prevail,

the Issuer may, at its option (in the case of (i) above) and will (in the case of (ii) above, subject as provided below) having given not less than thirty nor more than sixty days' notice (ending, in the case of Instruments which bear interest at a floating rate, on a day upon which interest is payable) to the Holders of the Instruments in accordance with Condition 14 (which notice shall be irrevocable), redeem all (but not some only) of the outstanding Instruments comprising the relevant Series at their early tax redemption amount (the "Early Redemption Amount (Tax)") (which shall be their Outstanding Principal Amount or, in the case of Instruments which are non-interest bearing, their Amortized Face Amount (as defined in Condition 6.11) or such other redemption amount as may be specified in, or determined in accordance with the provisions of, the Final Terms), together with accrued interest (if any) thereon, provided, however, that in the case of (i) above, no such notice of redemption may be given earlier than ninety days (or, in the case of Instruments which bear interest at a floating rate a number of days which is equal to the aggregate of the number of days falling within the then current interest period applicable to the Instruments plus sixty days) prior to the earliest date on which the Issuer would be obliged to pay such additional amounts were a payment in respect of the Instruments then due and, in the case of (ii) above, such determination will be promptly notified in accordance with Condition 14 and such redemption will take place within one year from the date of such notice, and provided, further, that in the case of any Instruments which are listed on the Luxembourg Stock Exchange (so long as such Instruments are listed on the Luxembourg Stock Exchange) the Issuer shall promptly notify the Luxembourg Stock Exchange of such early redemption.

Notwithstanding the provisions of (ii) above, the Issuer shall not redeem the Instruments if the Issuer shall subsequently determine, based upon the written opinion of independent legal counsel of recognized standing not less than thirty days prior to the date fixed for redemption, that subsequent payments would not be subject to any such requirement in which case the Issuer shall give notice of such determination in accordance with Condition 14 below not less than fifteen days prior to the date fixed for redemption and any earlier redemption notice shall be revoked and of no further effect.

Notwithstanding the foregoing, if and so long as all certification, information or other reporting requirements referred to in (ii) above would be fully satisfied by payment of a United States backup withholding tax or similar charge (but without any requirement to disclose the nationality, residence or identity of the beneficial owner thereof), the Issuer may elect (notwithstanding the provisions of Condition 8.01 (iii)) in the notice to pay additional amounts in accordance with Condition 8.01.

In the event that the Issuer elects to pay such additional amounts and as long as it is obligated to pay such additional amounts, the Issuer will have the right, at its sole option, at any time, but in accordance with the notice provisions set out above, to redeem the Instruments, in whole but not in part, at the Early Redemption Amount (Tax), together with accrued interest (if any) thereon, including any additional amounts required to be paid under the above paragraph.

"United States person" means a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof or therein, or an estate or trust treated as a United States person under Section 7701(a)(30) of the United States Internal Revenue Code of 1986, as amended (the "Code").

The Issuer may not exercise such option in respect of any Instrument which is the subject of the prior exercise by the Holder thereof of its option to require the redemption of such Instrument under Condition 6.06.

Optional Early Redemption (Call)

6.03 If this Condition 6.03 is specified in the Final Terms as being applicable, then the Issuer may, having given the appropriate notice and subject to such conditions as may be specified in the Final Terms, redeem all (but not, unless and to the extent that the Final Terms specifies otherwise, some only) of the Instruments of the relevant Series at their call early redemption amount (the "Early Redemption Amount (Call)") (which shall be their Outstanding Principal Amount or, in the case of Instruments which are non-interest bearing, their Amortized Face Amount (as defined in Condition 6.11) or such other redemption amount as may be specified in, or determined in accordance with the provisions of, the Final Terms), together with accrued interest (if any) thereon on the date specified in such notice.

28

The Issuer may not exercise such option in respect of any Instrument which is the subject of the prior exercise by the Holder thereof of its option to require the redemption of such Instrument under Condition 6.06.

6.04 The appropriate notice referred to in Condition 6.03 is a notice given by the Issuer to the Holders of the Instruments of the relevant Series in accordance with Condition 14, which notice shall be irrevocable and shall specify:

- the Series of Instruments subject to redemption;

- whether such Series is to be redeemed in whole or in part only and, if in part only, the aggregate principal amount of and (except in the case of a Temporary Global Instrument or Permanent Global Instrument) the serial numbers of the Instruments of the relevant Series which are to be redeemed;

- the due date for such redemption, which shall be not less than thirty days nor more than sixty days after the date on which such notice is given and which shall be such date or the next of such dates ("Call Option Date(s)") or a day falling within such period ("Call Option Period"), as may be specified in the Final Terms and which is, in the case of Instruments which bear interest at a floating rate, a date upon which interest is payable; and

- the Early Redemption Amount (Call) at which such Instruments are to be redeemed.

Partial Redemption

6.05 If the Instruments of a Series are to be redeemed in part only on any date in accordance with Condition 6.03:

- in the case of Bearer Instruments (other than a Temporary Global Instrument or Permanent Global Instrument), the Instruments to be redeemed shall be drawn by lot in such European city as the Fiscal Agent may specify, or identified in such other manner or in such other place as the Fiscal Agent may approve and deem appropriate and fair;

- in the case of a Temporary Global Instrument or a Permanent Global Instrument, the Instruments to be redeemed shall be selected in accordance with the rules of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system; and

- in the case of Registered Instruments, the Instruments shall be redeemed (so far as may be practicable) pro rata to their principal amounts, provided always that the amount redeemed in respect of each Instrument shall be equal to the minimum denomination thereof or an integral multiple thereof,

subject always to compliance with all applicable laws and the requirements of any stock exchange and/or market on or by which the relevant Instruments may be listed and/or admitted to trading.

In the case of the redemption of part only of a Registered Instrument, a new Registered Instrument in respect of the unredeemed balance shall be issued in accordance with Conditions 2.04 to 2.09 which shall apply as in the case of a transfer of Registered Instruments as if such new Registered Instrument were in respect of the untransferred balance.

Optional Early Redemption (Put)

6.06 If this Condition 6.06 is specified in the Final Terms as being applicable, then the Issuer shall, upon the exercise of the relevant option by the Holder of any Instrument of the relevant Series, redeem such Instrument on the date specified in the relevant Put Notice (as defined below) at its put early redemption amount (the "Early Redemption Amount (Put)") (which shall be its Outstanding Principal Amount or, if such Instrument is non-interest bearing, its Amortized Face Amount (as defined in Condition 6.11) or such other redemption amount as may be specified in, or determined in accordance with the provisions of, the Final Terms), together with accrued interest (if any) thereon. In order to exercise such option, the Holder must, not less than forty-five days before the date on which such redemption is required to be made as specified in the Put Notice (which date shall be such date or the next of the dates ("Put Date(s)") or a day falling within such period

29

("Put Period") as may be specified in the Final Terms), deposit the relevant Instrument (together, in the case of an interest-bearing Definitive Instrument, with all unmatured Coupons appertaining thereto other than any Coupon maturing on or before the date of redemption (failing which the provisions of Condition 9A.06 apply)) during normal business hours at the specified office of, in the case of a Bearer Instrument, any Paying Agent or, in the case of a Registered Instrument, the Registrar together with a duly completed early redemption notice ("Put Notice") in the form which is available from the specified office of any of the Paying Agents or, as the case may be, the Registrar specifying, in the case of a Temporary Global Instrument or Permanent Global Instrument or Registered Instrument, the aggregate principal amount in respect of which such option is exercised (which must be the minimum denomination specified in the Final Terms or an integral multiple thereof). No Instrument so deposited and option exercised may be withdrawn (except as provided in the Issue and Paying Agency Agreement).

In the case of the redemption of part only of a Registered Instrument, a new Registered Instrument in respect of the unredeemed balance shall be issued in accordance with Conditions 2.04 to 2.09 which shall apply as in the case of a transfer of Registered Instruments as if such new Registered Instrument were in respect of the untransferred balance.

The holder of an Instrument may not exercise such option in respect of any Instrument which is the subject of an exercise by the Issuer of its option to redeem such Instrument under either Condition 6.02 or 6.03.

Purchase of Instruments

6.07 The Issuer or any of its subsidiaries may at any time purchase Instruments in the open market or otherwise and at any price provided that all unmatured Receipts and Coupons appertaining thereto are purchased therewith. If purchases are made by tender, tenders must be available to all Holders of Instruments alike.

Cancellation of Redeemed and Purchased Instruments

6.08 All unmatured Instruments and Coupons redeemed or purchased in accordance with this Condition 6 will be cancelled forthwith and may not be reissued or resold.

Further Provisions applicable to Redemption Amount and Instalment Amounts

6.09 The provisions of Condition 5.07 and the last paragraph of Condition 5.08 shall apply to any determination or calculation of the Redemption Amount or any Instalment Amount required by the Final Terms to be made by the Calculation Agent (as defined in Condition 5.09).

6.10 References herein to "Redemption Amount" shall mean, as appropriate, the Maturity Redemption Amount, the final Instalment Amount, Early Redemption Amount (Tax), Early Redemption Amount (Call), Early Redemption Amount (Put) and Early Termination Amount or such other amount in the nature of a redemption amount as may be specified in, or determined in accordance with the provisions of, the Final Terms.

6.11 In the case of any Instrument which is non-interest bearing, the "Amortized Face Amount" shall be an amount equal to the sum of:

(i) the Issue Price specified in the Final Terms; and

(ii) the product of the Amortization Yield (compounded annually) being applied to the Issue Price from (and including) the Issue Date specified in the Final Terms to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Instrument becomes due and repayable.

Where such calculation is to be made for a period which is not a whole number of years, the calculation in respect of the period of less than a full year shall be made on the basis of the Day Count Fraction (as defined in Condition 5.09) specified in the Final Terms for the purposes of this Condition 6.11.

6.12 If any Redemption Amount (other than the Maturity Redemption Amount) is improperly withheld or refused or default is otherwise made in the payment thereof, the Amortized Face Amount shall be

30

calculated as provided in Condition 6.11 but as if references in subparagraph (ii) to the date fixed for redemption or the date upon which such Instrument becomes due and repayable were replaced by references to the earlier of:

(i) the date on which, upon due presentation or surrender of the relevant Instrument (if required), the relevant payment is made; and

(ii) (except where presentation or surrender of the relevant Instrument is not required as a precondition of payment), the seventh day after the date on which, the Fiscal Agent or, as the case may be, the Registrar having received the funds required to make such payment, notice is given to the Holders of the Instruments in accordance with Condition 14 of that circumstance (except to the extent that there is a failure in the subsequent payment thereof to the relevant Holder).

7. Events of Default

7.01 The following events or circumstances as modified by, and/or such other events as may be specified in, the Final Terms (each an "Event of Default") shall be acceleration events in relation to the Instruments of any Series, namely:

(i) Non-payment: the Issuer fails to pay any amount of principal in respect of the Instruments of the relevant Series or any of them on the due date for payment thereof or fails to pay any amount of interest in respect of the Instruments of the relevant Series or any of them within thirty days of the due date for payment thereof; or

(ii) Breach of other obligations: the Issuer defaults in the performance or observance of any of its other obligations under or in respect of the Instruments of the relevant Series or the Issue and Paying Agency Agreement and (except in any case where such default is incapable of remedy when no such continuation or notice, as is hereinafter mentioned, will be required) such default remains unremedied for thirty days after written notice requiring such default to be remedied has been delivered to the Issuer at the specified office of the Fiscal Agent by the Holder of any such Instrument; or

(iii) Inability to meet financial obligations: the Issuer announces its inability to meet its financial obligations; or

(iv) Indebtedness for borrowed money: defaults for thirty days after notice in the payment of principal or interest with respect to any indebtedness for borrowed money under any fiscal, issue and paying agency agreement, indenture or similar agreement under which the Issuer has outstanding any indebtedness for borrowed money (as defined herein) (other than the Instruments) and which results in the aggregate principal amount of indebtedness of the Issuer in excess of U.S.$150,000,000 in respect of HSBC Finance becoming due and payable prior to maturity, which acceleration has not been rescinded or annulled; or

(v) Appointment of receiver: the entry by a court having jurisdiction in the premises of (a) a decree or order for relief in respect of the Issuer in an involuntary case or proceeding under any applicable United States federal or state bankruptcy, insolvency, reorganization or other similar law or (b) a decree or order appointing a conservator, receiver, liquidator, assignee, trustee, sequestrator or any other similar official of the Issuer, or of substantially all of the property of the Issuer, or ordering the winding up or liquidation of the affairs of the Issuer and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of sixty consecutive days; or

(vi) Voluntary bankruptcy proceedings: the commencement by the Issuer of a voluntary case or proceeding under any applicable United States federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding, or the filing by the Issuer of a petition or answer or consent seeking reorganization or relief under any applicable United States federal or state law, or the consent by the Issuer to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Issuer or

31

of substantially all of the property of the Issuer, or the making by the Issuer of an assignment for the benefit of creditors, or the taking of corporate action by the Issuer in furtherance of any such action, or admission by the Issuer in writing of its inability to pay its debts generally as they become due.

7.02 If any Event of Default shall occur in relation to any Series of Instruments, any Holder of an Instrument of the relevant Series may, by written notice to the Issuer, at the specified office of the Fiscal Agent, declare that such Instrument and (if the Instrument is interest-bearing) all interest then accrued on such Instrument shall be forthwith due and payable, whereupon the same shall become immediately due and payable at its early termination amount (the "Early Termination Amount") (which shall be its Outstanding Principal Amount or, if such Instrument is non-interest bearing, its Amortized Face Amount (as defined in Condition 6.11) or such other redemption amount as may be specified in, or determined in accordance with the provisions of, the Final Terms), together with all interest (if any) accrued thereon without presentment, demand, protest or other notice of any kind, all of which the Issuer will expressly waive, anything contained in such Instruments to the contrary notwithstanding, unless, prior thereto, all Events of Default in respect of the Instruments of the relevant Series shall have been cured.

8. Taxation

8.01 Unless specified otherwise in the relevant Final Terms, all amounts payable (whether in respect of principal, interest or otherwise) in respect of the Instruments will be made free and clear of and without withholding or deduction for or on account of any present or future taxes, assessments or governmental charges of whatever nature imposed or levied by or on behalf of the United States or any political subdivision thereof or any authority or agency therein or thereof having power to tax, unless the withholding or deduction of such taxes, assessments or governmental charges is required by law. In that event, unless specified otherwise in the relevant Final Terms, the Issuer will pay such additional amounts as may be necessary in order that the net amounts receivable by the Holder, who is a United States Alien, after such withholding or deduction shall equal the respective amounts which would have been receivable by such Holder in the absence of such withholding or deduction; except that the obligation to pay such additional amounts shall not apply to:

(i) any tax, assessment or governmental charge that would not have been imposed but for the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary, partner, member or shareholder of, or holder of power over, such Holder, if such Holder is an estate, trust, partnership, limited liability company or corporation; or between an estate, trust, partnership or limited liability company in which such Holder is a fiduciary, settlor, beneficiary, partner or member) and the United States, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, partner, member, shareholder, estate, trust, partnership, limited liability company or holder of a power), being considered as:

(a) being or having been present or engaged in a trade or business in the United States or having had a permanent establishment therein; or

(b) having a current or former relationship with the United States, including a relationship as a citizen or resident or being treated as a resident thereof; or

(c) being or having been a personal holding company, a controlled foreign corporation, a passive foreign investment company, a foreign personal holding company with respect to the United States, a corporation that has accumulated earnings to avoid United States federal income tax or a private foundation or other tax-exempt organization; or

(d) an actual or constructive "10% shareholder" of the Issuer as defined in Section 871(h)(3) of the Code; or

(ii) any Holder who is a fiduciary, partnership, limited liability company or other than the sole beneficial owner of the Instrument or Coupon, but only to the extent that a beneficiary or settlor with respect to such fiduciary or a partner or member of such partnership or limited liability company or a beneficial owner of the Instrument or Coupon would not have been entitled to the payment of an additional amount had such beneficiary, settlor, partner, member or beneficial owner been the Holder of such Instrument or Coupon; or

32

(iii) any tax, assessment or governmental charge (including, without limitation, backup withholding tax) that would not have been imposed or withheld but for the failure to comply with certification, identification, documentation or information reporting requirements concerning the nationality, residence, identity or connection with the United States of a Holder or a beneficial owner of such Instrument or Coupon, if, without regard to any tax treaty, such compliance is required by statute or regulation of the United States as a precondition to relief or exemption from such tax, assessment or governmental charge; or

(iv) any tax, assessment or governmental charge that would not have been imposed or withheld but for the presentation by the Holder of the Instrument or Coupon for payment on a date more than thirty days after the Relevant Date; or

(v) any estate, inheritance, gift, sales, transfer, excise, wealth or personal property tax or any similar tax, assessment or governmental charge; or

(vi) any tax, assessment or governmental charge that is (a) payable otherwise than by deduction or withholding by the Issuer or a Paying Agent from the payment of the principal of or interest on the Instrument or Coupon or (b) required to be deducted or withheld by any Paying Agent from any such payment if such payment can be made without such withholding by any other Paying Agent; or

(vii) any tax, assessment or governmental charge that would not have been imposed or withheld but for the treatment of the interest paid by the Issuer as contingent interest described in Section 871(h)(4) of the Code or interest described in Section 881(c)(3)(A) of the Code; or

(viii) any tax, assessment or governmental charge that would not have been imposed or withheld but for an election by the Holder the effect of which is to make the payment of the principal of or interest (or any other amount) on an Instrument or Coupon by the Issuer or a Paying Agent subject to United States federal income tax; or

(ix) any tax, assessment or governmental charge where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26–27 November 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive; or

(x) any Instrument or Coupon presented for payment by or on behalf of a holder who would have been able to avoid such withholding or deduction by presenting the relevant Instrument or Coupon to another Paying Agent in a member state of the EU; or

(xi) any combination of items (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix) or (x).

8.02 For the purposes of these Terms and Conditions:

(i) "United States Alien" means any person who, for United States federal income tax purposes, is a foreign corporation, a nonresident alien individual, a nonresident alien fiduciary of a foreign estate or trust; or a foreign partnership one or more of the members of which is, for United States federal income tax purposes, a foreign corporation, a nonresident alien individual or a nonresident alien fiduciary of a foreign estate or trust; and

(ii) the "Relevant Date" means, in respect of any payment, the date on which such payment first becomes due and payable, but if the full amount of the moneys payable has not been received by the Fiscal Agent, or as the case may be, the Registrar on or prior to such due date, it means the first date on which, the full amount of such moneys having been so received and being available for payment to Holders, notice to that effect shall have been duly given to the Holders of the Instruments of the relevant Series in accordance with Condition 14.

8.03 Any reference in these Terms and Conditions to "principal" and/or "interest" in respect of the Instruments shall be deemed also to refer to any additional amounts which may be payable under this Condition 8. Unless the context otherwise requires, any reference in these Terms and Conditions to "principal" shall

33

include any premium payable in respect of an Instrument, any Instalment Amount or Redemption Amount and any other amounts in the nature of principal payable pursuant to these Terms and Conditions and "interest" shall include all amounts payable pursuant to Condition 5 and any other amounts in the nature of interest payable pursuant to these Terms and Conditions.

9. Payments

9A Payments—Bearer Instruments

9A.01 This Condition 9A is applicable in relation to Instruments in bearer form.

9A.02 Payment of amounts (other than interest) due in respect of Bearer Instruments will be made against presentation and (save in the case of partial payment or payment of an Instalment Amount (other than the final Instalment Amount)) surrender of the relevant Bearer Instruments at the specified office of any of the Paying Agents outside the United States and its possessions.

Payment of Instalment Amounts (other than the final Instalment Amount) in respect of an Instalment Instrument which is a Definitive Instrument with Receipts will be made against presentation of the Instrument together with the relevant Receipt and surrender of such Receipt.

The Receipts are not and shall not in any circumstances be deemed to be documents of title and if separated from the Instrument to which they relate will not represent any obligation of the Issuer. Accordingly, the presentation of an Instrument without the relative Receipt or the presentation of a Receipt without the Instrument to which it appertains shall not entitle the Holder to any payment in respect of the relevant Instalment Amount.

9A. 03 Payment of amounts in respect of interest on Bearer Instruments will be made:

(i) in the case of a Temporary Global Instrument or Permanent Global Instrument, against presentation of the relevant Temporary Global Instrument or Permanent Global Instrument at the specified office of any of the Paying Agents outside (unless Condition 9A.04 applies) the United States and its possessions and, in the case of a Temporary Global Instrument, upon due certification as required therein;

(ii) in the case of Definitive Instruments without Coupons attached thereto at the time of their initial delivery, against presentation of the relevant Definitive Instruments at the specified office of any of the Paying Agents outside (unless Condition 9A.04 applies) the United States and its possessions; and

(iii) in the case of Definitive Instruments delivered with Coupons attached thereto at the time of their initial delivery, against surrender of the relevant Coupons or, in the case of interest due otherwise than on a scheduled date for the payment of interest, against presentation of the relevant Definitive Instruments, in either case at the specified office of any of the Paying Agents outside (unless Condition 9A.04 applies) the United States and its possessions.

9A.04 Payments of amounts due in respect of Bearer Instruments and exchanges of Talons for Coupon sheets in accordance with Condition 9A.07 will not be made at the specified office of any Paying Agent in the United States and its possessions (as defined in the United States Internal Revenue Code and Regulations promulgated thereunder) unless (a) payment in full of amounts due in respect of interest on such Instruments when due or, as the case may be, the exchange of Talons at all the specified offices of the Paying Agents outside the United States and its possessions is illegal or effectively precluded by exchange controls or other similar restrictions and (b) such payment or exchange is permitted by applicable United States law. If paragraphs (a) and (b) of the previous sentence apply, the Issuer shall forthwith appoint a further Paying Agent with a specified office in New York City.

9A.05 If the due date for payment of any amount due in respect of any Bearer Instrument is not a Relevant Financial Center Day and a local banking day (each as defined in Condition 9C.03), then the Holder thereof will not be entitled to payment thereof until the next day which is such a day, and from such day and thereafter will be entitled to receive payment by cheque on any local banking day, and will be entitled to payment by transfer to a designated account on any day which is a local banking day, a Relevant Financial

34

Center Day and a day on which commercial banks and foreign exchange markets settle payments in the relevant currency in the place where the relevant designated account is located and no further payment on account of interest or otherwise shall be due in respect of such postponed payment unless there is a subsequent failure to pay in accordance with these Terms and Conditions in which event interest shall continue to accrue as provided in Condition 5.06 or, if appropriate, Condition 5.10.

9A.06 Each Definitive Instrument initially delivered with Coupons, Talons or Receipts attached thereto should be presented and, save in the case of partial payment of the Redemption Amount, surrendered for final redemption together with all unmatured Receipts, Coupons and Talons relating thereto, failing which:

(i) if the Final Terms specifies that this paragraph (i) of Condition 9A.06 is applicable (and, in the absence of specification, this paragraph (i) shall apply to Definitive Instruments which bear interest at a fixed rate or rates or in fixed amounts) and subject as hereinafter provided, the amount of any missing unmatured Coupons (or, in the case of a payment not being made in full, that portion of the amount of such missing Coupon which the Redemption Amount paid bears to the total Redemption Amount due) (excluding, for this purpose, but without prejudice to paragraph (iii) below, Talons) will be deducted from the amount otherwise payable on such final redemption, the amount so deducted being payable against surrender of the relevant Coupon at the specified office of any of the Paying Agents at any time within ten years of the Relevant Date applicable to payment of such Redemption Amount;

(ii) if the Final Terms specifies that this paragraph (ii) of Condition 9A.06 is applicable (and, in the absence of specification, this paragraph (ii) shall apply to Instruments which bear interest at a floating rate or rates or in variable amounts) all unmatured Coupons (excluding, for this purpose, but without prejudice to paragraph (iii) below, Talons) relating to such Definitive Instruments (whether or not surrendered therewith) shall become void and no payment shall be made thereafter in respect of them;

(iii) in the case of Definitive Instruments initially delivered with Talons attached thereto, all unmatured Talons (whether or not surrendered therewith) shall become void and no exchange for Coupons shall be made thereafter in respect of them; and

(iv) in the case of Definitive Instruments initially delivered with Receipts attached thereto, all Receipts relating to such Instruments in respect of a payment of an Instalment Amount which (but for such redemption) would have fallen due on a date after such due date for redemption (whether or not surrendered therewith) shall become void and no payment shall be made thereafter in respect of them.

The provisions of paragraph (i) of this Condition 9A.06 notwithstanding, if any Definitive Instruments should be issued with a maturity date and an Interest Rate or Rates such that, on the presentation for payment of any such Definitive Instrument without any unmatured Coupons attached thereto or surrendered therewith, the amount required by paragraph (i) to be deducted would be greater than the Redemption Amount otherwise due for payment, then, upon the due date for redemption of any such Definitive Instrument, such unmatured Coupons (whether or not attached) shall become void (and no payment shall be made in respect thereof) as shall be required so that, upon application of the provisions of paragraph (i) in respect of such Coupons as have not so become void, the amount required by paragraph (i) to be deducted would not be greater than the Redemption Amount otherwise due for payment. Where the application of the foregoing sentence requires some but not all of the unmatured Coupons relating to a Definitive Instrument to become void, the relevant Paying Agent shall determine which unmatured Coupons are to become void, and shall select for such purpose Coupons maturing on later dates in preference to Coupons maturing on earlier dates.

9A.07 In relation to Definitive Instruments initially delivered with Talons attached thereto, on or after the due date for the payment of interest on which the final Coupon comprised in any Coupon sheet matures, the Talon comprised in the Coupon sheet may be surrendered at the specified office of any Paying Agent outside (unless Condition 9A.04 applies) the United States and its possessions in exchange for a further Coupon sheet (including any appropriate further Talon), subject to the provisions of Condition 10 below. Each Talon shall, for the purpose of these Conditions, be deemed to mature on the Interest Payment Date on which the final Coupon comprised in the relative Coupon sheet matures.

35

9B Payments—Registered Instruments

9B.01 This Condition 9B is applicable in relation to Instruments in registered form.

9B.02 Payment of the Redemption Amount (together with accrued interest) due in respect of Registered Instruments will be made against presentation and, save in the case of partial payment of the Redemption Amount, surrender of the relevant Registered Instruments at the specified office of the Registrar. If the due date for payment of the Redemption Amount of any Registered Instrument is not a Relevant Financial Center Day (as defined in Condition 9C.03), then the Holder thereof will not be entitled to payment thereof until the next day which is such a day, and from such day and thereafter will be entitled to receive payment by cheque on any local banking day, and, will be entitled to payment by transfer to a designated account on any day which is a local banking day, a Relevant Financial Center Day and a day on which commercial banks and foreign exchange markets settle payments in the relevant currency in the place where the relevant designated account is located and no further payment on account of interest or otherwise shall be due in respect of such postponed payment unless there is a subsequent failure to pay in accordance with these Terms and Conditions in which event interest shall continue to accrue as provided in Condition 5.06 or, as appropriate, Condition 5.10.

9B.03 Payment of amounts (whether principal, interest or otherwise) due (other than the Redemption Amount) in respect of Registered Instruments will be paid to the Holder thereof (or, in the case of joint Holders, the first-named) as appearing in the register kept by the Registrar as at opening of business (local time in the place of the specified office of the Registrar) on the fifteenth Relevant Banking Day (as defined in Condition 2.06) before the due date for such payment (the "Record Date").

9B.04 Notwithstanding the provisions of Condition 9C.02, payment of amounts (whether principal, premium, if any, and/or interest or otherwise) due (other than the Redemption Amount) in respect of Registered Instruments will be made in the currency in which such amount is due by check (in the case of payment in euro, by euro check) and posted to the address (as recorded in the register held by the Registrar) of the Holder thereof (or, in the case of joint Holders, the first-named) on the Relevant Banking Day (as defined in Condition 2.06) not later than the relevant due date for payment unless prior to the relevant Record Date the Holder thereof (or, in the case of joint Holders, the first-named) has applied to the Registrar and the Registrar has acknowledged such application for payment to be made to a designated account denominated in the relevant currency (in the case aforesaid, a non-resident account with an authorized foreign exchange bank) in which case payment shall be made on the relevant due date for payment by transfer to such account. In the case of payment by transfer to an account, if the due date for any such payment is not a Relevant Financial Center Day, then the Holder thereof will not be entitled to payment thereof until the first day thereafter which is a Relevant Financial Center Day and a day on which commercial banks and foreign exchange markets settle payments in the relevant currency in the place where the relevant designated account is located and no further payment on account of interest or otherwise shall be due in respect of such postponed payment unless there is a subsequent failure to pay in accordance with these Terms and Conditions in which event interest shall continue to accrue as provided in Condition 5.06 or, as appropriate, Condition 5.10.

9C Payments—General Provisions

9C.01 Save as otherwise specified in these Terms and Conditions, this Condition 9C is applicable in relation to Instruments whether in bearer or in registered form.

9C.02 Payments of amounts due (whether principal, premium, if any, and/or interest or otherwise) in respect of Instruments will be made in the currency in which such amount is due in accordance with the applicable clearing systems of Euroclear, Clearstream, Luxembourg or such other systems as used for the Instruments as provided below:

(i) payments in a Specified Currency other than euro will be made by a check in the Specified Currency drawn on, a bank in the principal financial center of the country of such Specified Currency or, at the option of the payee, by transfer to an account in such Specified Currency (which, in the case of a payment in Yen to a non-resident of Japan, shall be a non-resident account) maintained by the payee; and

(ii) payments in euro will be made by a euro check or, at the option of the payee, by credit or transfer to a euro account specified by the payee;

36

Payments will, without prejudice to the provisions of Condition 8, be subject in all cases to any applicable fiscal or other laws and regulations. References to "Specified Currency" include any successor currency under applicable law.

9C.03 For the purposes of these Terms and Conditions:

(i) "Relevant Financial Center Day" means (other than a Saturday or Sunday), in the case of any currency other than euro, a day on which commercial banks and foreign exchange markets settle payments in the relevant Financial Center (as defined in the ISDA Definitions) and in any Additional Financial Center specified in the Final Terms or, in the case of payment in euro, a day on which the TARGET System is open and in any Additional Financial Center specified in the Final Terms; and

(ii) "local banking day" means a day (other than a Saturday or Sunday) on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in the place of presentation of the relevant Instrument or, as the case may be, Receipt or Coupon.

9C.04 All payments are subject in all cases to any applicable fiscal or other laws, regulations and directives, but without prejudice to the provisions of Condition 8. No commissions or expenses shall be charged to the holders of Instruments or Coupons in respect of such payments.

10. Prescription

10.01 Claims against the Issuer for payment of principal, premium, if any, and/or interest in respect of Instruments will be prescribed and become void unless made, in the case of principal, within ten years or, in the case of interest, five years after the Relevant Date (as defined in Condition 8.02) for payment thereof.

10.02 In relation to Definitive Instruments initially delivered with Talons attached thereto, there shall not be included in any Coupon sheet issued upon exchange of a Talon any Coupon which would be void upon issue pursuant to Condition 9A.06 or the due date for the payment of which would fall after the due date for the redemption of the relevant Instrument or which would be void pursuant to this Condition 10 or any Talon the maturity date of which would fall after the due date for redemption of the relevant Instrument.

11. The Paying Agents, the Registrars and the Calculation Agent

11.01 The initial Paying Agents and Registrars and their respective initial specified offices are specified below. The Calculation Agent in respect of any Instruments shall be specified in the Final Terms. The Issuer reserves the right at any time to vary or terminate the appointment of any Paying Agent (including the Fiscal Agent) or the Registrar or the Calculation Agent and to appoint additional or other Paying Agents or another Registrar or another Calculation Agent provided that it will at all times maintain (i) a Fiscal Agent, (ii) in the case of Registered Instruments, a Registrar, (iii) a Paying Agent (which may be the Fiscal Agent) with a specified office in a continental European city, (iv) so long as the Instruments are listed on the Luxembourg Stock Exchange and/or on or by any other stock exchange and/or market, a Paying Agent (which may be the Fiscal Agent) and a Registrar each with a specified office in Luxembourg and/or in such other place as may be required by the rules of such other stock exchange and/or market, (v) the Issuer will ensure that it maintains a Paying Agent with a specified office in an EU Member State that will not be obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC, (vi) in the circumstances described in Condition 9A.04, a Paying Agent with a specified office in New York City, and (vii) a Calculation Agent where required by the Terms and Conditions applicable to any Instruments (in the case of (i), (ii), (iii) and (vii) with a specified office located in such place (if any) as may be required by the Terms and Conditions). The Paying Agents, the Registrar and the Calculation Agent reserve the right at any time to change their respective specified offices to some other specified office in the same city. Notice of all changes in the identities or specified offices of any Paying Agent, the Registrar or the Calculation Agent will be given promptly by the Issuer to the Holders in accordance with Condition 14.

11.02 The Paying Agents, the Registrar and the Calculation Agent act solely as agents of the Issuer and, save as provided in the Issue and Paying Agency Agreement or any other agreement entered into with respect to its appointment, do not assume any obligations towards or relationship of agency or trust for any Holder of any Instrument, Receipt or Coupon and each of them shall only be responsible for the performance of

37

the duties and obligations expressly imposed upon it in the Issue and Paying Agency Agreement or other agreement entered into with respect to its appointment or incidental thereto.

12. Replacement of Instruments

If any Instrument, Receipt or Coupon is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the specified office of the Fiscal Agent or such Paying Agent or Paying Agents as may be specified for such purpose in the Final Terms (in the case of Bearer Instruments and Coupons) or of the Registrar (in the case of Registered Instruments) ("Replacement Agent"), subject to all applicable laws and the requirements of any stock exchange and/or market on or by which the Instruments are listed and/or admitted to trading upon payment by the claimant of all expenses incurred in connection with such replacement and upon such terms as to evidence, security, indemnity and otherwise as the Issuer and the Replacement Agent may require. Mutilated or defaced Instruments, Receipts and Coupons must be surrendered before replacements will be delivered therefor.

13. Meetings of Holders and Modification

The Issue and Paying Agency Agreement contains provisions (which shall have effect as if incorporated herein) for convening meetings of the Holders of Instruments of any Series to consider any matter affecting their interest, including (without limitation) the modification by Extraordinary Resolution (as defined in the Issue and Paying Agency Agreement) of these Terms and Conditions insofar as the same may apply to such Instruments. An Extraordinary Resolution passed at any meeting of the Holders of Instruments of any Series will be binding on all Holders of the Instruments of such Series, whether or not they are present at the meeting, and on all Holders of Coupons relating to Instruments of such Series.

The Issuer may, with the consent of the Fiscal Agent, but without the consent of the Holders of the Instruments of any Series or Coupons, amend these Terms and Conditions insofar as they may apply to such Instruments to correct a manifest error. Subject as aforesaid, no other modification may be made to these Terms and Conditions except with the sanction of an Extraordinary Resolution.

14. Notices

To Holders of Bearer Instruments

14.01 Notices to Holders of Bearer Instruments will, save where another means of effective communication has been specified herein or in the Final Terms, be deemed to be validly given if (i) published in a leading daily newspaper having general circulation in London (which is expected to be the Financial Times) and (ii) in the case of any Instruments which are listed on the Luxembourg Stock Exchange (so long as such Instruments are listed on the Luxembourg Stock Exchange and the rules of that exchange so require), in a leading newspaper having general circulation in Luxembourg (which is expected to be the D'Wort), or if such publication is not practicable, if published in a leading English language daily newspaper having general circulation in Europe (or, if permitted by the rules of the relevant stock exchange, in the case of Instruments represented by a Temporary Global Instrument or Permanent Global Instrument, if delivered to Euroclear and Clearstream, Luxembourg and/or any other relevant clearing system for communication by them to the persons shown in their respective records as having interests therein). The Issuer shall also ensure that notices are duly published in compliance with the requirements of the rules of each stock exchange and/or market on or by which the Instruments are listed and/or admitted to trading. In the case of Instruments which are listed on the Luxembourg Stock Exchange, notices will be required to be published in a daily newspaper in Luxembourg, in all cases. Any notice so given will be deemed to have been validly given on the date of first such publication (or, if required to be published in more than one newspaper, on the first date on which publication shall have been made in all the required newspapers) or, as the case may be, on the fourth weekday after the date of such delivery to Euroclear and Clearstream, Luxembourg and/or such other clearing system. Holders of Coupons will be deemed for all purposes to have notice of the contents of any notice given to Holders of Bearer Instruments in accordance with this Condition.

To Holders of Registered Instruments

14.02 Notices to Holders of Registered Instruments will be deemed to be validly given if sent by first class mail (or equivalent) or (if posted to an overseas address) by air mail to them (or, in the case of joint Holders, to the first-named in the register kept by the Registrar) at their respective addresses as recorded in the

38

register kept by the Registrar, and will be deemed to have been validly given on the fourth weekday after the date of such mailing or, if posted from another country, on the fifth such day. In the case of Instruments which are listed on the Luxembourg Stock Exchange and the rules of that exchange so require such notices will also be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the D'Wort).

15. Further Issues

The Issuer may from time to time, without the consent of the Holders of any Instruments or Coupons, create and issue further instruments, bonds or debentures having the same terms and conditions as such Instruments in all respects (or in all respects except for the first payment of interest, if any, on them and/or the denomination thereof) so as to form a single series with the Instruments of any particular Series.

16. Currency Indemnity

The currency in which the Instruments are denominated or, if different, payable, as specified in the Final Terms (or, in the case of Instruments to which Condition 9E applies, the Selected Currency (as defined in Condition 9E.02)) (the "Contractual Currency"), is the sole currency of account and payment for all sums payable by the Issuer in respect of the Instruments, including damages. Any amount received or recovered in a currency other than the Contractual Currency (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction or otherwise) by any Holder of an Instrument or Coupon in respect of any sum expressed to be due to it from the Issuer shall only constitute a discharge to the Issuer to the extent of the amount in the Contractual Currency which such Holder is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so). If that amount is less than the amount in the Contractual Currency expressed to be due to any Holder of an Instrument or Coupon in respect of such Instrument or Coupon the Issuer shall indemnify such Holder against any loss sustained by such Holder as a result. In any event, the Issuer shall indemnify each such Holder against any cost of making such purchase which is reasonably incurred. These indemnities constitute a separate and independent obligation from the Issuer's other obligations, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by any Holder of an Instrument or Coupon and shall continue in full force and effect despite any judgment, order, claim or proof for a liquidated amount in respect of any sum due in respect of the Instruments or any judgment or order. Any such loss aforesaid shall be deemed to constitute a loss suffered by the relevant Holder of an Instrument or Coupon and no proof or evidence of any actual loss will be required by the Issuer.

17. Waiver and Remedies

No failure to exercise, and no delay in exercising, on the part of the Holder of any Instrument, any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or future exercise thereof or the exercise of any other right. Rights hereunder shall be in addition to all other rights provided by law. No notice or demand given in any case shall constitute a waiver of rights to take other action in the same, similar or other instances without such notice or demand.

18. Law and Jurisdiction

18.01 The Instruments and the Issue and Paying Agency Agreement are governed by, and shall be construed in accordance with, the laws of the State of New York.

18.02 The Issuer irrevocably agrees for the benefit of the Holders of the Instruments that any New York State or United States federal court sitting in New York City, the Borough of Manhattan, and the courts of England shall have jurisdiction to hear and determine any suit, action or proceedings, and to settle any disputes, which may arise out of or in connection with the Instruments, the Receipts, the Coupons (respectively, "Proceedings" and "Disputes") and, for such purposes, irrevocably submits to the jurisdiction of such courts.

18.03 The Issuer irrevocably waives any objection which it might now or hereafter have to any New York State or United States federal court sitting in New York City, the Borough of Manhattan, and the courts of England being nominated as the forum to hear and determine any Proceedings and to settle any Disputes and agrees not to claim that any such court is not a convenient or appropriate forum.

39

18.04 The Issuer agrees that the process by which any proceedings in New York City are begun may be served on it by being delivered to it at 2700 Sanders Road, Prospect Heights, Illinois 60070 (Attention: Office of the Secretary) and that the process by which any proceedings in England are begun may be served on it by being delivered to HFC Bank Limited at its office at, North Street, Winkfield, Windsor, Berkshire SL4 4TD (Attention: Company Solicitor). If the appointment of the persons mentioned in this Condition 18.04 ceases to be effective, the Issuer shall forthwith appoint a further person in the United States or in England as the case may be to accept service of process on its behalf and notify the name and address of such person to the Fiscal Agent and, failing such appointment within fifteen days, any Holder of an Instrument shall be entitled to appoint such a person by written notice addressed to the Issuer and delivered to the Issuer or to the specified office of the Fiscal Agent. Nothing contained herein shall affect the right of any Holder of an Instrument to serve process in any other manner permitted by law.

18.05 The submission to the jurisdiction of New York State or United States federal courts sitting in New York City or in the Borough of Manhattan and the courts of England shall not (and shall not be construed so as to) limit the right of the Holders of the Instruments or any of them to take Proceedings in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction (whether concurrently or not) if and to the extent permitted by applicable law.

40

FORM OF WHOLESALE FINAL TERMS

The Final Terms applicable to each Tranche of Instruments in relation to which application has not been made to be admitted to trading on an EU regulated market will be substantially in the form annexed to the Dealership Agreement as Schedule 7 (Pro Forma Other Final Terms) and will contain such information as is applicable in respect of such Instruments. The Final Terms applicable to each Tranche of Instruments to be admitted to trading on an EU regulated market will be in the following form and will contain such information as is applicable in respect of such Instruments (all references to numbered Conditions being to the Terms and Conditions of the relevant Instruments):

Pro Forma Wholesale Final Terms for an issue by the Issuer under the Program for the Issuance of Debt Instruments

FINAL TERMS DATED [ ]

Series No.[ ]

Tranche No.[ ]

HSBC FINANCE CORPORATION

Issue of [Aggregate Principal Amoun of Tranche] [Title of Ins ruments] under the Program for the Issuance of

up to U.S.$35,000,000,000 of Debt Instruments

t t

PART A – CONTRACTUAL TERMS

Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions (the "Conditions") set forth in the Base Prospectus dated 9 September 2005 [and the supplemental Base Prospectus dated [ ] which [together] constitute[s] a base prospectus for the purposes of the Prospectus Directive (Directive 2003/71/EC) (the "Prospectus Directive"). This document constitutes the Final Terms of the Instruments described herein for the purposes of Article 5.4 of the Prospectus Directive and must be read in conjunction with such Base Prospectus [as so supplemented]. Full information on the Issuer and the offer of the Instruments is only available on the basis of the combination of these Final Terms and the Base Prospectus. [The Base Prospectus [and the supplemental Base Prospectus] [is] [are] available for viewing at, and copies may be obtained from, Dexia Banque Internationale à Luxembourg, société anonyme, 69, route d'Esch, L-2953 Luxembourg.

[The following alternative language applies if the first Tranche of an issue of Instruments which is being increased was issued under a Base Prospectus with an earlier date.

Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions (the "Conditions") set forth in the Base Prospectus dated 9 September 2005 [and the supplemental Base Prospectus dated [ ]]. This document constitutes the Final Terms of the Instruments described herein for the purposes of Article 5.4 of the Prospectus Directive (Directive 2003/71/EC) (the "Prospectus Directive") and must be read in conjunction with the Base Prospectus dated 9 September 2005 [and the supplemental Base Prospectus dated [ ], which [together] constitute[s] a base prospectus for the purposes of the Prospectus Directive, save in respect of the Conditions which are extracted from the Base Prospectus dated 9 September 2005 [and the supplemental Base Prospectus dated [ ] and are attached hereto. Full information on the Issuer and the offer of the Instruments is only available on the basis of the combination of these Final Terms and the Base Prospectuses dated 9 September 2005 and [current date] [and the supplemental Base Prospectuses dated [ ] and [ ]. [The Base Prospectus [and the supplemental Base Prospectus] [is] [are] available for viewing at, and copies may be obtained from, Dexia Banque Internationale à Luxembourg, société anonyme, 69, route d'Esch, L-2953 Luxembourg.]

[If the Instruments have a maturity of less than one year from their date of issue, the minimum denomination may need to be £100,000 or its equivalent in any other Specified Currency.]

41

[Include whichever of the following apply or specify as "Not Applicable" (N/A). Note that the numbering should remain as set out below, even if "Not Applicable" is indicated for individual paragraphs or sub-paragraphs. Italics denote directions for completing the Final Terms.]

[When completing final terms or adding any other final terms or information consideration should be given as to whether such terms or information constitute "significant new factors" and consequently trigger the need for a supplement to the Prospectus under Article 16 of the Prospectus Directive.]

1. Issuer: HSBC Finance Corporation

2. [(i)] Series Number: [Specify]

[(ii) Tranche Number: [Specify] (If fungible with an existing Series, details of that Series, including the date on which the Instruments become fungible).]

3. Specified Currency or Currencies: [Specify currency of denomination and currency of Payment (Condition 1.11)]

4. Aggregate Principal Amount:

[(i)] Series: [If interchangeable with existing Series]

[(ii) Tranche: [Specify]]

5. Issue Price: [ ] per cent. of the Aggregate Nominal Amount [plus accrued interest from [insert date (if applicable)]]

6. Specified Denominations: [Specify (Condition 1.09 or 1.10)]

7. [(i)] Issue Date: [Specify]

[(ii) Interest Commencement Date (if different from the Issue Date):

[ ]]

8. Maturity Date: [(Condition 6.01) Specify date or (for Floating Rate Instruments) Interest Payment Date falling in the relevant month and year]

9. Interest Basis: [[ ] per cent. Fixed Rate] [[specify reference rate] +/-[ ] per cent. Floating Rate] [Other (specify)] (further particulars specified below)

10. Redemption/Payment Basis: [Redemption at par] [Partly Paid (Condition 1.12) Specify number, amounts and dates for, and method of, payment of instalments of subscription monies and any further additional provisions (including Forfeiture Dates in respect of late payment of Partly Paid Instalments)] [Instalment]

42

11. Change of Interest or Redemption/Payment Basis: [Not Applicable / Applicable] [Specify details of any provision for convertibility of Instruments into another interest or redemption/ payment basis]

12. Put/Call Options: [Investor Put] [Issuer Call] [(further particulars specified below)]

13. [(i)] Status of the Instruments:

[(ii)] Date of Board approval for issuance of Instruments obtained:

Instruments will be issued on an unsecured and unsubordinated basis.

[ ] (N.B: Only relevant where Board (or similar) authorisation is required for the particular Tranche of Instruments).

14. Method of distribution: [Syndicated/Non-syndicated]

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE

15. Fixed Rate Instrument Provisions: [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)

(i) Rate[(s)] of Interest: [ ] per cent. per annum [payable [annually/semi-annually/quarterly/monthly] in arrear]

(ii) Interest Payment Date(s): [[ ] in each year, up to and including the Maturity Date][adjusted in accordance with [specify Business Day Convention and any applicable Additional Financial Centre(s) for the definition of Business Day] / not adjusted] (Amend as applicable in the case of long or short Coupons)

(iii) Fixed Coupon Amount[(s)]: [Not Applicable/if applicable, specify [ ] per [ ] in Principal Amount]

(iv) Broken Amount(s): [Insert particulars of any initial or final broken interest amounts which do not correspond with the Fixed Coupon Amount(s)]

(v) Day Count Fraction: [30/360] [Actual/Actual (ISMA)] [Other] (Consider for Euro denominated issues, should be on an Actual/Actual basis)

(vi) Determination Date(s): [ ] in each year (Insert interest payment dates, except where there are long or short periods. In these cases, insert regular interest payment dates; Note only relevant where Day Count Fraction is Actual/Actual (ISMA)

(vii) Other terms relating to the method of calculating interest for Fixed Rate Instruments:

[Not Applicable/give details]

16. Floating Rate Instrument Provisions: [Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph)

43

(i) Specified Period(s)/Specified Interest Payment Dates:

[Specify dates (or if the Applicable Business Day Convention is the FRN Convention) applicable number of months]

(ii) Business Day Convention: [[Floating Rate Convention / Following Business Day Convention / Modified Following Business Day Convention / Preceding Business Day Convention / Other (give details) / No Adjustment] Specify unless no adjustment is required in which case specify "No Adjustment". If nothing is specified there will be no adjustment. Care should be taken to match the maturity date (as well as other key dates) of the Instruments with any underlying swap transaction. Since maturity dates do not automatically move with business day conventions under ISDA, it may be necessary to specify "No Adjustment" in relation to the maturity date of the Instruments to disapply Applicable Business Day Convention]

(iii) Definition of Business Day: [(Condition 5.09) Specify any Additional Financial Centre(s) for the purpose of adjusting any date in accordance with a Business Day Convention]

(iv) Manner in which the Rate(s) of Interest is/are to be determined:

[Screen Rate Determination / ISDA Determination / Other (give details)]

(v) Party responsible for calculating the Rate(s) of Interest and Interest Amount(s) (if not the Agent):

[Name and specified office]

(vi) Reference Banks (if any): [Not Applicable/specify]

(vii) Screen Rate Determination: [Applicable/Not Applicable]

—Reference Rate: [(Condition 5.09) Specify (Either LIBOR, EURIBOR or other, although additional information is required if other—including fallback provisions)]

—Interest Determination Date(s): [(Condition 5.09) Specify number of Banking Days in which city(ies), if different from (Condition 5.09)]. [Relevant Time—[ ](a.m./p.m.] [Specify City/time] (Second London business day prior to the start of each Interest Period if LIBOR (other than Sterling or euro LIBOR), first day of each Interest Period if Sterling LIBOR and the second day on which the TARGET System is open prior to the start of each Interest Period if EURIBOR or euro LIBOR)

—Relevant Screen Page: [Reuters Screen/Telerate/Other] page [ ] (In the case of EURIBOR, if not Telerate Page 248 ensure it is a page which shows a composite rate or amend the fallback

44

provisions appropriately)]

(viii) ISDA Determination: [Applicable/Not Applicable]

—Floating Rate Option: [Specify]

—Designated Maturity: [Specify]

—Reset Date: [Specify]

(ix) Margin(s): [+/-] [ ] per cent. per annum

(x) Minimum Rate of Interest: [ ] per cent. per annum

(xi) Maximum Rate of Interest: [ ] per cent. per annum

(xii) Day Count Fraction: [Specify]

(xiii) Fall back provisions, rounding provisions, denominator and any other terms relating to the method of calculating interest on Floating Rate Instruments, if different from those set out in the Conditions:

[ ]

PROVISIONS RELATING TO REDEMPTION

17. Call Option: [Applicable/Not Applicable]

[(If not applicable, delete the remaining sub-paragraphs of this paragraph) (Condition 6.03)]

(i) Optional Redemption Date(s): [Specify]

(ii) Optional Redemption Amount(s) and method, if any, of calculation of such amount(s):

[[ ] per Instrument of [ ] Specified Denomination].

(iii) If redeemable in part: [Specify, otherwise redemption will only be permitted of entire Series]

(a) Minimum Redemption Amount: [ ]

(b) Maximum Redemption Amount: [ ]

(iv) Notice period (if other than as set out in the Conditions):

[ ]

18. Put Option: [Applicable/Not Applicable]

[(If not applicable, delete the remaining sub-paragraphs of this paragraph)]

(i) Optional Redemption Date(s): [Specify]

(ii) Optional Redemption Amount(s) and method, if any, of calculation of such amount(s):

[[ ] per Instrument of [ ] Specified Denomination].

(iii) Notice period (if other than as set out in the [ ]

45

Conditions):

19. Maturity Redemption Amount: [(Condition 6.01) [[ ] per Instrument of [ ] Specified Denomination (give details)].

20. Early Redemption Amount

Early Redemption Amount(s) payable on redemption for taxation reasons or on event of default and/or the method of calculating the same (if required or if different from that set out in the Conditions):

[[ ] per Instrument of [ ] Specified Denomination]. [Date after which charges in law, etc., entitle Issuer to redeem—Specify if not the Issue Date].

GENERAL PROVISIONS APPLICABLE TO THE INSTRUMENTS

21. Form of Instruments:

(i) Bearer Instruments: [Not applicable]

[Temporary Global Instrument, without interest coupons attached, which will be deposited with a common depositary for Euroclear Bank S.A./N.V., as operator for the Euroclear system, and Clearstream Banking, société anonyme, on or about the Issue Date and will be exchangeable for interests in a Permanent Global Instrument, without interest coupons attached, on the Exchange Date (a date not earlier than forty days after the Issue Date) upon certification as to non-U.S. beneficial ownership which is exchangeable in whole, but not in part, for Definitive Instruments in denominations of [specify denomination of Instruments] each with interest coupons attached on [number] days' notice/at any time/in the limited circumstances specified in the Permanent Global Instrument]

[Temporary Global Instrument, without interest coupons attached, which will be deposited with a common depositary for Euroclear Bank S.A./N.V., as operator for the Euroclear system, and Clearstream Banking, société anonyme, on or about the Issue Date and will be exchangeable for interests in Definitive Instruments, with interest coupons attached, on the Exchange Date (a date not earlier than forty days after the Issue Date) upon certification as to non-U.S. beneficial ownership]

[Permanent Global Instrument, without interest coupons attached, which will be deposited with a common depositary for Euroclear Bank S.A./N.V., as operator for the Euroclear system, and Clearstream Banking, société anonyme, on or about the Exchange Date (a date not earlier than forty days after the Issue Date) and will be exchangeable at the option of the bearer for Definitive Instruments, with

46

interest coupons attached, on [ ] days' notice/at any time/in the limited circumstances specified in the Permanent Global Instrument]. (Condition 1.05)

(ii) Registered Instruments: [Not Applicable/ Specify]

22. Additional Financial Centre(s) or other special provisions relating to Payment Dates:

[Not Applicable/give details. Note that this item relates to the place of payment, and not interest period end dates, to which item 17(iv) relates]

23. Coupons to be attached to Definitive Instruments: [Yes/No]

24. Talons for future Coupons or Receipts to be attached to Definitive Instruments (and dates on which such Talons mature):

[(Condition 1.06 or 1.07) Yes/No. If yes, give details]

25. Details relating to Partly Paid Instruments: amount of each payment comprising the Issue Price and date on which each payment is to be made and consequences (if any) of failure to pay, including any right of the Issuer to forfeit the Instruments and interest due on late payment:

[Not Applicable/give details (Condition 6.01) (Note that a new form of Temporary Global Instrument and/or Permanent Global Instrument may be required for Partly Paid issues)]

26. Details relating to Instalment Instruments: amount of each instalment, date on which each payment is to be made:

[Not Applicable/give details]

27. Redenomination, renominalization and reconventioning provisions:

[Not Applicable/The provisions [in Condition [ ] apply]

28. Consolidation provisions: [Not Applicable/The provisions [in Condition [ ] apply]

29. Redemption applicable: [Yes/No] (If yes, insert redenomination/ reconventioning/ renominalization wording including either the applicable fixed rate Day Count Fraction or any provision necessary to deal with floating rate interest calculation (including alternative reference notes))

DISTRIBUTION

30. (i) If syndicated, names of Managers: [Not Applicable/give names of Relevant Dealer/Lead Manager and other Dealers/Managers (if any)]

(ii) Stabilizing Manager (if any): [Not Applicable / In connection with the issue and distribution of any Tranche of Instruments issued under the program, name of Stabilizing Manager] (or person

acting on behalf of the Stabilizing Manager) may over-allot Instruments (provided that, in the case of any Tranche of Instruments to be admitted to trading on the Luxembourg Stock Exchange, the aggregate principal amount of Instruments allotted does not exceed 105 per cent. of the aggregate principal amount of the relevant Tranche)

[

47

or effect transactions with a view to supporting the market price of the Instruments at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilizing Manager (or person acting on behalf of the Stabilizing Manager) will undertake stabilization action. Any stabilization action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Instruments is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Instruments and 60 days after the date of the allotment of the relevant Tranche of Instruments.]

31. Name of Relevant Dealer: [Not Applicable/give name]

32. Additional selling restrictions: [Not Applicable/give details]

United States of America: Regulation S of the United States Securities Act of 1933, as amended. Category 2 restrictions apply. The Instruments are subject to TEFRA D Rules. [Specify Exchange Date].

Other: [Specify any modifications of or additions to selling restrictions contained in the Amended and Restated Dealership Agreement].

[LISTING APPLICATION

These Final Terms comprise the final terms required to list and have admitted to trading the issue of Instruments described herein pursuant to the U.S.$35,000,000,000 Program for the Issuance of Debt Securities of HSBC Finance Corporation dated 9 September 2005.]

RESPONSIBILITY

The Issuer accepts responsibility for the information contained in these Final Terms.

Signed on behalf of the HSBC Finance Corporation:

By: ______________________________________

Duly authorized

48

PART B – OTHER INFORMATION

1. LISTING

(i) Listing: [Luxembourg/other (specify)/None]

(ii) Admission to trading: [Application has been made for the Instruments to be admitted to trading on [ ] with effect from [ ].] [Not Applicable.]

(Where documenting a fungible issue, need to indicate that original securities are already admitted to trading)

(iii) Estimate of total expenses related to admission to trading:

[ ]

2. RATINGS

Ratings: The Instruments to be issued have been rated:

[S&P: [ ]] [Moody's: [ ]] [[Other]: [ ]] (The above disclosure should reflect the rating allocated to Instruments of the type being issued under the Program generally or, where the issue has been specifically rated, that rating.) Instruments to be issued under the Program are, unless otherwise specified in the applicable Final Terms, expected to be rated A1 by Moody's, A by Standard & Poor's, and AA- by Fitch Ratings.

3. NOTIFICATION

[Not Applicable][The Luxembourg Commission de Surveillance du Secteur Financier [has been requested to provide/has provided - include first alternative for an issue which is contemporaneous with the establishment or update of the Program and the second alternative for subsequent issues] the [include names of competent authorities of host Member States] with a certificate of approval attesting that the Base Prospectus has been drawn up in accordance with the Prospectus Directive.]

4. INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE [ISSUE/OFFER]

[Not Applicable][Need to include a description of any interest, including conflicting ones, that is material to the issue/offer, detailing the persons involved and the nature of the interest. May be satisfied by the inclusion of the following statement:

"Save as discussed in ["Subscription and Sale"], so far as the Issuer is aware, no person involved in the offer of the Instruments has an interest material to the offer."]

49

5. REASONS FOR THE OFFER, ESTIMATED NET PROCEEDS AND TOTAL EXPENSES [(i) Reasons for the offer: [(i)/(ii)] Estimated net proceeds:

[ ] (See ["Use of Proceeds"] wording in Base Prospectus – if reasons for offer differ from general financing requirements and/or making profit and hedging certain risks will need to include those reasons here.)] [ ]

(If proceeds are intended for more than one use will need to split out and present in order of priority. If proceeds insufficient to fund all proposed uses state amount and sources of other funding.)

[(ii)/(iii)] [Estimated total expenses:

[ ] [Include breakdown of expenses.] (Only necessary to include disclosure of net proceeds and total expenses at (ii) and (iii) above where disclosure is included at (i) above.) ]

6. [Fixed Rate Instruments Only] – YIELD

Indication of yield:

[ ]

The yield is calculated at the Issue Date on the basis of the Issue Price. It is not an indication of future yield. ]

7. OPERATIONAL INFORMATION ISIN Code: [ ]

Common Code: [ ]

Any clearing system(s) other than Euroclear Bank S.A./N.V., as operator for the Euroclear system, and Clearstream Banking, société anonyme, and the relevant identification number(s):

[Not Applicable/give name(s) and number(s)]

Delivery: Delivery [against/free of] payment

Names and addresses of Additional Paying Agent(s) (if any):

[Not applicable/give names and addresses]

[(i)] Definitive Instruments to be security printed:

[Yes/No]

[(ii) If yes whether steel engraved plates will be used:

[Yes/No]]

[(ii/iii) Definitive instruments to be in ISMA or successors format:

[[Yes/No] if nothing is specified Definitive Instruments will be in ISMA or successors format]]

50

USE OF PROCEEDS

The net proceeds of the issue of each Tranche of Instruments will be applied by the Issuer to meet part of its general financing requirements.

51

HSBC FINANCE CORPORATION

HSBC Finance and its subsidiaries offer a diversified range of financial services. HSBC Finance was incorporated in Delaware on November 13, 2002 with registered number 3590092, as successor to an enterprise which traces its origin through the same ownership to an office established in 1878. The address of its principal executive office is 2700 Sanders Road, Prospect Heights, Illinois 60070, United States of America (telephone: +1 847-564-5000). HSBC Finance is a Delaware corporation with unlimited duration.

HSBC Finance is a subsidiary of HSBC Investments (North America) Inc., an indirect wholly owned subsidiary of HSBC Holdings. HSBC Holdings, headquartered in London, England, is one of the largest banking and financial services organizations in the world. HSBC Holdings' ordinary shares are admitted to trading on the London Stock Exchange and are listed on The Stock Exchange of Hong Kong, Euronext Paris and the Bermuda Stock Exchange and its American depository shares are listed on the New York Stock Exchange.

HSBC Finance provides middle-market consumers with several types of loan products in the United States, the United Kingdom, Canada, the Republic of Ireland, the Czech Republic and Hungary. The principal product of its consumer financial services business is the making of cash loans, real estate loans secured by first and second mortgages, sales finance loans and other unsecured loans directly to consumers in the United States. Loans are made through branch lending offices under the brands "HFC" and "Beneficial," and through direct mail, correspondents, telemarketing and the Internet. HSBC Finance also acquires portfolios of open-end and closed-end, secured and unsecured loans.

HSBC Finance offers both MasterCard* and VISA* credit cards to residents throughout the United States primarily through strategic affinity relationships. HSBC Finance also purchases and services revolving charge card accounts originated by merchants. These accounts result from consumer purchases of goods and services from the originating merchant. HSBC Finance also directly originates closed-end sales contracts.

HSBC Finance also makes loans for the purchase of new and used vehicles. Installment contracts are secured by the vehicles and these contracts are purchased from franchised dealers. HSBC Finance also lends directly to customers through direct mail solicitations, Internet applications and alliance partner referrals. HSBC Finance is the leading U.S. provider of tax-related financial products to customers through nearly 25,000 unaffiliated professional tax preparer locations and tax preparation software providers.

HSBC Finance's subsidiaries primarily service the loans made by HSBC Finance and its subsidiaries.

HSBC Finance offers credit life, disability and unemployment, accidental death and disability, term life, whole life, annuities, disability, long term care and a variety of other specialty insurance products to its customers. Such insurance is generally written directly by, or reinsured with, one of its insurance affiliates.

Internationally, its United Kingdom subsidiaries offer secured and unsecured lines of credit and closed-end loans, retail finance products, insurance products and credit cards and operates in England, Scotland, Wales, Northern Ireland and the Republic of Ireland. HSBC Finance's Canadian business offers consumer real estate secured and unsecured lines of credit, closed-end loans, insurance products, private label credit cards, retail finance products and auto loans to middle and low income families and accepts deposits through its trust operations.

* MasterCard and VISA are registered trademarks of MasterCard International, Incorporated and VISA USA, Inc., respectively.

52

SELECTED FINANCIAL INFORMATION OF HSBC FINANCE

HSBC Holdings completed its acquisition of HSBC Finance on March 28, 2003. In accordance with the guidelines for accounting for business combinations, the purchase price paid by HSBC Holdings plus related purchase accounting adjustments have been "pushed-down" and recorded in HSBC Finance's consolidated financial statements for the period subsequent to March 28, 2003. This has resulted in a new basis of accounting reflecting the fair market value of HSBC Finance's assets and liabilities for the "successor" period beginning March 29, 2003. Information for all "predecessor" periods prior to the merger are presented using HSBC Finance's historical basis of accounting which impacts its comparability to "successor" periods.

The financial information which is set forth below as of December 31, 2004 and 2003 and for the year ended December 31, 2004 and for the periods January 1 through March 28, 2003 and March 29 through December 31, 2003 has been derived from, and is qualified in its entirety by reference to, the consolidated financial statements and notes thereto of HSBC Finance and subsidiaries contained in HSBC Finance's Annual Report on Form 10-K for the year ended December 31, 2004, a copy of which will be available at the specified offices of each Paying Agent. The consolidated financial statements and notes thereto of HSBC Finance and subsidiaries have been audited by KPMG LLP, an independent registered public accounting firm. The financial information which is set forth below for the six months ended June 30, 2005 and June 30, 2004 as well as at June 30, 2005 has been derived from the unaudited consolidated financial statements and notes thereto of HSBC Finance and subsidiaries which, in the opinion of HSBC Finance's management, reflect all normal and recurring adjustments necessary for a fair presentation of HSBC Finance's results for such periods. The results of operations for the six months ended June 30, 2005 are not necessarily indicative of the results of operations that may be expected for any future quarters or the year ending December 31, 2005.

All consolidated financial information of HSBC Finance and its subsidiaries presented below is qualified in its entirety by the detailed information and consolidated financial statements included in the documents referred to under "Documents Incorporated by Reference". All amounts are stated in millions of U.S. dollars.

53

Consolidated Statements of Income

Combined results for the year ended December 31, 2003 can be calculated by combining results for the periods January 1 through March 28, 2003 (predecessor) and March 29 through December 31, 2003 (successor).

Six months ended

June 30, ____2005

Six months ended

June 30, ____2004

Year EndedDecember

_____31, 2004

March 29 through

December 31, _______2003

January 1 through

March 28, _______2003

(Unaudited) (Successor)

(Unaudited) (Successor)

(Successor) (Successor) (Predecessor)

(dollars in millions)

Finance and other interest income ............................... $ 6,089 $ 5,165 $ 10,945 $ 7,773 $ 2,469

Interest expense ............................................................ 2,166 1,415 3,143 2,031 897

Net interest income ...................................................... 3,923 3,750 7,802 5,742 1,572

Provision for credit losses ............................................ 1,872 1,925 4,334 2,991 976

Net interest income after provision for credit losses . 2,051 1,825 3,468 2,751 596

Other revenues: Securitization revenue ............................................. 139 614 1,008

1,027 434

Insurance revenue.................................................... 450 415 839 575 171

Investment income................................................... 66 71 137 116 80

Derivative income .................................................... 336 176 511 284 2

Fee income............................................................... 660 507 1,091 784 280

Taxpayer financial services revenue ....................... 261 212 217 4 181

Other income ........................................................... 674 280 607 317 64

Gain on bulk sale of private label receivables ........ - - 663 - -

Total other revenues .................................................. 2,586 2,275 5,073 3,107 1,212

Costs and expenses: Salaries and employee benefits ............................... 1,023 942 1,886

1,507 491

Sales incentives........................................................ 172 168 363 226 37

Occupancy and equipment expenses....................... 169 160 323 302 98

Other marketing expenses ....................................... 365 263 636 409 139

Other servicing and administrative expenses.......... 401 424 868 835 314

Support services from HSBC affiliates 426 373 750 - -

Amortization of intangibles..................................... 190 195 363 246 12

Policyholders' benefits............................................. 238 206 412 286 91

HSBC acquisition related costs incurred by HSBC Finance Corporation ................................................

- - - - 198

Total costs and expenses ............................................ 2,984 2,731 5,601 3,811 1,380

Income before income tax expense.............................. 1,653 1,369 2,940 2,047 428

Income tax expense ...................................................... 555 466 1,000 690 182

Net income................................................................... $ 1,098 $ 903 $ 1,940 $ 1,357 $ 246

54

Consolidated Balance Sheets

At June 30, At December 31,

2005 2004 2003

(Unaudited) (Successor)

(Successor) (Successor)

(In millions, except share data)

Assets

Cash .................................................................................................................. $ 512 $ 392 $ 463

Interest bearing deposits with banks ................................................................ 413 603 1,277

Securities purchased under agreements to resell ............................................. 421 2,651 -

Securities .......................................................................................................... 4,014 3,645 9,720

Receivables, net................................................................................................ 116,495 104,815 91,027

Intangible assets, net ........................................................................................ 2,491 2,705 2,856

Goodwill........................................................................................................... 6,799 6,856 6,697

Properties and equipment, net .......................................................................... 470 487 527

Real estate owned............................................................................................. 459 587 631

Derivative financial assets ............................................................................... 1,698 4,049 3,016

Other assets ...................................................................................................... $ 3,971 $ 3,400 $ 2,838

Total Assets ..................................................................................................... $ 137,743 $ 130,190 $ 119,052

Liabilities

Debt: Deposits ....................................................................................................... $ 38

$ 47 $ 232

Commercial paper, bank and other borrowings .......................................... 10,645 9,013 9,122

Due to affiliates ........................................................................................... 16,408 13,789 7,589

Long term debt (with original maturities over one year)............................ 87,044 85,378 79,632

Total debt.......................................................................................................... 114,135 108,227 96,575

Insurance policy and claim reserves ................................................................ 1,295 1,303 1,258

Derivative related liabilities ............................................................................. 397 432 597

Other liabilities................................................................................................. 3,427 3,287 3,131

Total liabilities ................................................................................................ 119,254 113,249 101,561

Shareholder's equity

Redeemable preferred stock, 1,501,100 shares authorized: Series A, $0.01 par value, 1,100 shares issued held by HSBC Investments (North America) Inc. .............................................................. 1,100

1,100 1,100

Series B, $0.01 par value, 575,000 shares issued at June 30, 2005............ 575 - -

Common shareholder's equity:

Common stock, $1.00 par value, 100 shares authorized, 50 shares issued ............................................................................................................ -

- -

Additional paid-in capital............................................................................ 14,662 14,627 14,645

Retained earnings ........................................................................................ 1,632 571 1,303

Accumulated other comprehensive income ................................................ 520 643 443

Total common shareholder's equity ............................................................. 16,814 15,841 16,391

Total liabilities and shareholder's equity .................................................... $ 137,743 $ 130,190 $ 119,052

55

SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN U.S. GAAP AND INTERNATIONAL FINANCIAL REPORTING STANDARDS

Financial statements in the United States are prepared in accordance with U.S. GAAP. The European Union requires all European listed companies to prepare their consolidated financial statements using IFRS. The significant differences between U.S. GAAP and IFRS as they relate to the financial statements of the Company are disclosed below:

Deferred origination expenses

U.S. GAAP

• Certain loan fee income and direct loan origination costs, including an amortization of overheads, are amortized to the income statement over the life of the loan as an adjustment to interest income (SFAS 91, "Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases").

IFRS

• Substantially all loan fee income and incremental directly attributable loan origination costs are amortized to the income statement over the expected life of the loan as part of the effective interest calculation (International Accounting Standard ("IAS") 18, "Revenue").

Derivative financial instruments

U.S. GAAP

• All derivatives must be recognized as either assets or liabilities in the balance sheet and be measured at fair value (SFAS 133, "Accounting for Derivative Instruments and Hedging Activities").

• The accounting for changes in the fair value of a derivative (i.e. gains and losses) depends on the intended use of the derivative and the resulting designation as described below:

- For a derivative designated as hedging exposure to changes in the fair value of a recognized asset or liability or a firm commitment, the gain or loss is recognized in earnings in the period of change together with the associated loss or gain on the hedged item attributable to the risk being hedged. Any resulting net gain or loss represents the ineffective portion of the hedge.

- For a derivative designated as hedging exposure to variable cash flows of a recognized asset or liability, or of a forecast transaction, the derivative's gain or loss associated with the effective portion of the hedge is initially reported as a component of other comprehensive income and subsequently reclassified into earnings when the forecast transaction affects earnings. The ineffective portion is reported in earnings immediately.

- For net investment hedges in which derivatives hedge the foreign currency exposure of a net investment in a foreign operation, the change in fair value of the derivative associated with the effective portion of the hedge is included as a component of other comprehensive income, together with the associated loss or gain on the hedged item. The ineffective portion is reported in earnings immediately.

- In order to apply hedge accounting it is necessary to comply with documentation requirements and to demonstrate the effectiveness of the hedge on an ongoing basis.

- For a derivative not designated as a hedging instrument, the gain or loss is recognized in earnings in the period of change in fair value.

56

IFRS

• Accounting for derivatives under IFRS is generally consistent with U.S. GAAP, as described above.

• IFRS permits hedge accounting for hedges of forecast cash inflows and outflows determined on a group basis.

• IFRS does not permit the use of the 'shortcut method' of hedge effectiveness testing for certain transactions. Under this method, it may be assumed, at inception of the hedge, there is no ineffectiveness in the hedging of interest rate risk with an interest rate swap provided specific criteria are met.

Financial instruments designated as at fair value through profit or loss

U.S. GAAP

• For financial assets to be measured at fair value under U.S. GAAP with changes in fair value reported in net income, generally they must meet the definition of trading securities in SFAS 115 "Accounting for Certain Investments in Debt and Equity Securities". Financial liabilities are generally reported at amortized cost under U.S. GAAP.

IFRS

• IAS 39 permits any financial asset or liability to be elected upon initial recognition to be recorded at fair value, with changes in fair value reported in net income (the "Fair Value Option"), provided that fair value can be reliably measured and certain criteria are met.

Securitizations

U.S. GAAP

• SFAS 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", requires that receivables that are sold to a special purpose entity and securitized can only be derecognized and a gain or loss on sale recognized if the originator has surrendered control over those securitized assets.

• Control has been surrendered over transferred assets if, and only if, all of the following conditions are met:

- The transferred assets have been put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership.

- Each holder of interests in the transferee (i.e., holder of issued notes) has the right to pledge or exchange their beneficial interests, and no condition constrains this right and provides more than a trivial benefit to the transferor.

- The transferor does not maintain effective control over the assets through either an agreement that obligates the transferor to repurchase or to redeem them before their maturity or through the ability to unilaterally cause the holder to return specific assets, other than through a clean-up call.

- If these conditions are not met the securitized assets should continue to be consolidated.

• Where an interest in the securitized assets is retained, such as a servicing right or the right to residual cash flows from the special purpose entity, this interest is recognized at fair value on sale of the assets.

57

IFRS

• The recognition of securitised assets is governed by a three-step process. The process may be applied to a whole asset, or a part of an asset:

- If the rights to the cash flows have been transferred to a third party, those securitised assets should be derecognised.

- If the rights to the cash flows are retained but there is a contractual obligation to pay the cash flows to another party, the securitised assets should be derecognised.

- If the risks and rewards of ownership have been neither transferred nor retained it must be determined whether or not control has been retained. If it has not been retained, the asset should be derecognised. If control has been retained, an entity shall continue to recognize the asset to the extent of its continuing involvement.

Provision for credit losses

U.S. GAAP

• SFAS 5, "Accounting for Contingencies", requires the establishment of loss reserves for pools of homogeneous consumer receivables when both of the following conditions are met:

- As of the balance sheet date, it is probable that the consumer receivables are no longer expected to be fully recovered; and

- The amount of the loss can be reasonably estimated.

• Reserves are established using formula-based approaches or statistical methods to reflect the losses inherent in the pool of homogeneous consumer receivables. In addition, loss reserves on consumer receivables are maintained to reflect judgment of risk factors which may not be fully reflected in the formula-based or statistical methodology.

• Interest on non-performing loans is suspended upon reaching a predefined number of days delinquency, except for credit card receivables which generally accrue until charge-off.

IFRS

Provisions are made for impaired loans and advances when objective evidence of impairment exists and on a consistent basis.

Impairment provisions represent the quantification of incurred losses from homogeneous portfolios of assets and individually identified accounts. Impairment provisions are deducted from loans and advances in the balance sheet. The majority of impairment provisions are determined on a portfolio basis.

Portfolios

For the calculation of impairment on a portfolio basis, loans and advances are grouped on the basis of similar credit risk characteristics. Impairment is calculated on the basis of discounted future cash flows.

Future expected cash flows are estimated on the basis of historical loss experience for assets with credit risk characteristics similar to those in the group, adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist currently. Estimates of changes in future expected cash flows reflect and are directionally consistent with changes in related observable data from period to period. The methodologies and assumptions used for estimating future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience.

58

Individually assessed accounts

Specific impairment provisions on individually assessed accounts are determined by an evaluation of the discounted future cash flows on a case-by-case basis. This procedure is applied to all accounts that are not subject to a portfolio based approach. In estimating future cash flows on individually assessed accounts, the following factors are considered:

- HSBC Holdings' aggregate exposure to the customer (including contingent liabilities);

- the viability of the customer's business model and the capability of management to trade successfully out of financial difficulties and generate sufficient cash flow to service their debt obligations;

- the likely dividend available on liquidation or bankruptcy;

- the extent of other creditors' commitments ranking ahead of, or pari passu with, HSBC Holdings and the likelihood of other creditors continuing to support the company;

- the complexity of determining the aggregate amount and ranking of all creditor claims and the extent to which legal and insurance uncertainties are evident;

- the amount and timing of expected receipts and recoveries;

- the realizable value of security (or other credit mitigants) and likelihood of successful repossession;

- the deduction of any costs involved in recovery of amounts outstanding; and

- the ability of the borrower to obtain the relevant foreign currency if loans are not in local currency.

Releases on individually calculated specific provisions are recognized whenever HSBC Holdings has reasonable evidence that the established estimate of loss has been reduced.

Loan write-offs

Loans (and the related impairment provisions) are normally written off, either partially or in full, when there is no realistic prospect of recovery of these amounts and when the proceeds from the realization of security have been received.

Assets acquired in exchange for advances

Assets acquired in exchange for advances in order to achieve an orderly realization are reported in "Other assets". The asset acquired is recorded at the lower of its fair value less costs to sell and the carrying value of the advance disposed of, net of provisions, at the date of the exchange. No depreciation is provided in respect of such assets. Any subsequent write-down of an asset to fair value less costs to sell is recorded as an impairment loss. Any subsequent increase in fair value less costs to sell not in excess of any cumulative impairment loss is recognized as a gain in the income statement.

59

MANAGEMENT

Directors

The directors of the Issuer and their principal occupations as of the date hereof are set forth in the following table:

Name

Title

Principal Outside Activities

S. N. Mehta Director, Chairman and CEO CEO of HSBC North America Holdings Inc. W. R. P. Dalton Director G. G. Dillon Director D. Fishburn Director Director of HSBC Bank plc

Director of HFC Bank Limited C. F. Freidheim, Jr. Director R. K. Herdman Director Director of HSBC North America Holdings Inc. A. W. Jebson Director Director of HSBC Holdings

Group Chief Operating Officer of HSBC Holdings

G. A. Lorch Director Director of HSBC North America Holdings Inc. L. M. Renda Director

To the best of the Issuer's knowledge, there are no potential conflicts of interest between any duties to the Issuer of the directors of the Issuer.

The business address of the directors of the Issuer is 2700 Sanders Road, Prospect Heights, Illinois 60070, United States of America.

60

A4.

Executive Officers

The following persons, all of whom are full-time employees of the Issuer, hold the offices indicated in the following table as of the date hereof:

Name Office

S. N. Mehta Chairman and Chief Executive Officer S. L. Derickson Vice Chairman C. P. Kelly Senior Executive Vice President – Administration D. D. Gibbons Senior Executive Vice President – Chief Risk Officer K. H. Robin Senior Executive Vice President-General

Counsel & Corporate Secretary S. C. Penney Senior Executive Vice President and Chief Financial Officer J. B. Kauffman Executive Vice President – Policy & Compliance S. P. McMahon Executive Vice President A. C. Armishaw Group Executive - Chief Information Officer B. A. Sibblies Senior Vice President – Chief Accounting Officer J. D. O'Toole Senior Vice President - Government Relations F. M. Polayes Senior Vice President – Taxes E. D. Ancona Senior Vice President-Treasurer D. Dew Senior Vice President- Group Audit, Chicago B. A. Fletcher Senior Vice President – Chief Credit Officer P. A. Cozza Group Executive T. M. Detelich Group Executive J. C. Faulkner Group Executive A. R. Hill Group Executive W. G. Menezes Group Executive J. J. Haines Managing Director – Auto Finance J. W. Hoff Managing Director- Retail Services C. G. Hawkes Vice President – Risk Management Services J. Binyon Vice President – Controller C. S. Mizialko Vice President – Accounting Policy, Research

and External Reporting W. H. Kesler Vice President & Assistant Treasurer L. J. Klug Vice President & Managing Director –

Strategy & Development D. J. Mickey Vice President & Assistant Treasurer P. D. Schwartz Vice President, Deputy General Counsel –

Corporate & Assistant Secretary

To the best of the Issuer's knowledge, there are no potential conflicts of interest between any duties to the Issuer of the officers of the Issuer.

The business address of the officers of the Issuer is 2700 Sanders Road, Prospect Heights, Illinois 60070, United States of America.

61

A4

UNITED STATES TAXATION OF UNITED STATES ALIENS

The Information provided below does not purport to be a complete summary of United States tax law and practice currently applicable. Prospective investors who are in any doubt as to their tax position should consult with their own professional advisers. This section assumes that income with respect to Instruments or Coupons is not effectively connected with a trade or business in the United States in which a relevant United States Alien is engaged.

* * * *

Circular 230 Legend

The following discussion of United States federal income tax matters and any other discussions of United States federal income tax matters contained elsewhere in this Base Prospectus (a) were not intended or written to be legal or tax advice to any person and were not intended or written to be used, and they cannot be used, by any person for the purpose of avoiding any tax-related penalties that may be imposed on such person, and (b) were written in connection with the promotion or marketing of the Instruments by HSBC Finance or the Dealers. Each person considering an investment in the Instruments should seek advice based on its particular circumstances from an independent tax advisor.

* * * *

General

In the opinion of Sidley Austin Brown & Wood LLP, counsel to the Dealers, under present United States federal income and estate tax law, and subject to the discussion below concerning information reporting and backup withholding:

(a) payments of interest made outside the United States and its possessions on an Instrument by the Issuer or any of its Paying Agents to any Holder who is a United States Alien (as that term is defined in Condition 8.02), will not be subject to withholding of United States federal income tax; provided that (i) the Holder does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Issuer entitled to vote, (ii) the Holder is not a controlled foreign corporation for United States federal income tax purposes that is related, directly or indirectly, to the Issuer through stock ownership, (iii) the Holder is not a bank receiving interest described in Section 881(c)(3)(A) of the Code, (iv) the interest is not contingent interest as described in Section 871(h)(4) of the Code (relating primarily to interest based on or determined by reference to income, profits, cash flow and other comparable attributes of the obligor, or a party related to the obligor) and (v) if the Instrument is a Registered Instrument, the beneficial owner provides to the Issuer or to any of its Paying Agents (or, in certain circumstances, to a "qualified intermediary" or "withholding foreign partnership") a duly completed United States Internal Revenue Service Form W-8BEN (or successor or substitute form as may be acceptable to the payor);

(b) a Holder of an Instrument or Receipt who is a United States Alien will not be subject to United States federal income tax on payments of principal of (including any discount or premium) the Instrument or Receipt or on any gain realized on the sale, exchange, redemption or other disposition of the Instrument or Receipt provided that none of the Conditions described in Condition 8.01(i)(a)-(c) and 8.01(viii) apply; and

(c) an Instrument, Receipt or Coupon held by an individual who at the time of death is a United States Alien will not be subject to United States federal estate tax as a result of such individual's death, if at the time of death (i) the individual does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Issuer, and (ii) the Instrument, Receipt or Coupon does not provide for contingent interest (as described above).

Certain payments to non-corporate persons of interest and principal on obligations are subject to information reporting and may be subject to backup withholding. The current backup withholding rate is 28%

62

of the amount paid and is scheduled to increase to 31% for 2011 and thereafter. Payments of interest on and principal of an Instrument, Receipt or Coupon made outside the United States by the Issuer or any of its Paying Agents will generally not be subject to backup withholding or information reporting provided that (i) the Issuer or its Paying Agent does not have actual knowledge that the payee is a United States person and (ii) in the case of a Registered Instrument, the certification requirements set forth above are satisfied. Moreover, payments of interest on or principal of an Instrument, Receipt or Coupon collected outside the United States by the foreign office of a custodian, nominee or other agent acting on behalf of the beneficial owner and payments on the sale, exchange or retirement of an Instrument, Receipt or Coupon effected outside the United States by the foreign office of a broker generally are not subject to backup withholding. However, information reporting (but not backup withholding) will apply to such payments if payment is made by a payor that is, for United States federal income tax purposes, (a) a United States person, (b) a controlled foreign corporation, (c) a United States branch of a foreign bank or foreign insurance company, (d) a foreign partnership controlled by United States persons or engaged in a United States trade or business or (e) a foreign person 50% or more of whose gross income is effectively connected with the conduct of a United States trade or business for a specified three-year period, unless such payor has in its records documentary evidence that the beneficial owner is not a United States person and certain other conditions are met or the beneficial owner otherwise establishes an exemption.

Any amounts withheld from a payment to a United States Alien Holder under the backup withholding rules will be allowed as a credit against such Holder's United States federal income tax liability and may entitle such Holder to a refund provided that the required information is furnished to the United States Internal Revenue Service.

The above opinion of counsel and the foregoing discussion are based upon certain of the facts set forth in this Base Prospectus and other documents related to the issuance of Instruments and upon compliance with the provisions thereof and the representations and agreements therein. In rendering its opinion, counsel has, in particular, relied on representations to the Issuer by the Dealers that they have in effect procedures reasonably designed to ensure that their employees or agents who are directly engaged in selling the Instruments are aware that the Instruments, Receipts and Coupons cannot be offered or sold during the restricted period (as defined in Treasury regulations promulgated under Section 163(f) of the Code) to a person who is within the United States or who is a United States person, except as permitted by United States Treasury regulations. The Code, Treasury regulations, rulings and decisions in effect on the date hereof, upon which this opinion is also based, are all subject to change.

THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR SITUATION. HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE PARTICULAR CONSEQUENCES TO THEM OF HOLDING AND DISPOSING OF INSTRUMENTS, RECEIPTS OR COUPONS IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES, INCLUDING THE TAX CONSEQUENCES UNDER LOCAL, STATE, FOREIGN AND OTHER TAX LAWS AND POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL INCOME OR OTHER TAX LAWS.

63

SUBSCRIPTION AND SALE

Instruments may be sold from time to time by the Issuer to any one or more of ABN AMRO Bank N.V., Banco Bilbao Vizcaya Argentaria, S.A., Barclays Bank PLC, Credit Suisse First Boston (Europe) Limited, Deutsche Bank AG, London Branch, Fortis Bank nv-sa, HSBC Bank plc, ING Bank N.V., J.P. Morgan Securities Ltd., Landesbank Baden-Württemberg, Merrill Lynch International, Morgan Stanley & Co. International Limited and UBS Limited (the "Dealers"). Instruments may also be sold by the Issuer direct to institutions who are not Dealers. The arrangements under which Instruments may from time to time be agreed to be sold by the Issuer to, and purchased by, Dealers are set out in an amended and restated dealership agreement dated 1 June 2005 (the "Dealership Agreement"), and made between the Issuer and the Dealers. Any such agreement will, inter alia, make provision for the form and terms and conditions of the relevant Instruments, the price at which such Instruments will be purchased by the Dealers and the commissions or other agreed deductibles (if any) payable or allowable by the Issuer in respect of such purchase. The Dealership Agreement makes provision for the resignation or termination of appointment of existing Dealers and for the appointment of additional or other Dealers either generally in respect of the Program or in relation to a particular Tranche of Instruments.

United States of America: Regulation S Category 2; TEFRA D

Instruments have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, United States persons except in accordance with Regulation S under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act. Terms used in the preceding sentence have the meanings given to them by Regulation S under the Securities Act.

Instruments in bearer form are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to U.S. persons, except in certain transactions permitted by U.S. tax regulations. Terms used in the preceding sentence have the meanings given to them by the Code and regulations thereunder.

Each Dealer has represented and agreed and each further Dealer appointed under the Program will be required to represent and agree that, except as permitted by the Dealership Agreement, each such Dealer has not offered and sold and will not offer, sell or deliver Instruments within the United States or to or for the account or benefit of U.S. persons (i) as part of their distribution at any time and (ii) otherwise until forty days after the completion of the distribution of the Instruments comprising the relevant Tranche, as determined and certified to the Fiscal Agent or the Issuer by such relevant Dealer (or, in the case of a sale of a Tranche of Instruments to or through more than one Dealer, by each of such Dealers as to Instruments of such Tranche purchased by or through it, in which case the Fiscal Agent or the Issuer shall notify each such Dealer when all such Dealers have so certified), only in accordance with Rule 903 of Regulation S. Accordingly, the Dealers have not engaged or will not engage in any directed selling efforts with respect to Instruments, and the Dealers have complied and will comply with the offering restrictions requirements of Regulation S within the United States or to or for the account or benefit of U.S. persons, and such Dealer will have sent to each dealer to which it sells Instruments during the distribution compliance period relating thereto a confirmation or other notice setting forth the restrictions on offers and sales of the Instruments within the United States or to or for the account or benefit of U.S. persons. Terms used in the preceding paragraph have the meanings given to them by Regulation S under the Securities Act.

In addition, until forty days after the commencement of the offering of the Instruments comprising any Tranche, any offer or sale of Instruments within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act.

United Kingdom

Each Dealer has represented and agreed, and each further Dealer appointed under the Program will be required to represent and agree, that:

(a) in relation to any Instruments which have a maturity of less than one year, (i) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business and (ii) it has not offered or sold and will not offer or sell any Instruments

64

other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Instruments would otherwise constitute a contravention of Section 19 of the FSMA by the Issuer;

(b) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of any Instruments in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer; and

(c) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any Instruments in, from or otherwise involving the United Kingdom.

Japan

The Instruments have not been and will not be registered under the Securities and Exchange Law of Japan (the "Securities and Exchange Law") and, accordingly, each Dealer has represented and agreed and each further Dealer appointed under the Program will be required to represent and agree that it will not offer or sell any Instruments directly or indirectly, in Japan or to, or for the benefit of, any Japanese Person, or to others for reoffering or resale, directly or indirectly, in Japan or to any Japanese Person except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and other applicable laws, regulations and ministerial guidelines in Japan. For the purposes of this paragraph, "Japanese Person" shall mean any person resident in Japan, including any corporation or other entity organized under the laws of Japan.

Italy

The offering of the Instruments has not been cleared by CONSOB (the Italian Securities Exchange Commission) pursuant to Italian securities legislation and, accordingly, no Instruments may be offered, sold or delivered, nor may copies of the Base Prospectus or of any other document relating to the Instruments be distributed in the Republic of Italy, except:

(a) to professional investors (operatori qualificati), as defined in Article 31, second paragraph, of CONSOB Regulation No. 11522 of 1st July, 1998, as amended; or

(b) in circumstances which are exempted from the rules on solicitation of investments pursuant to Article 100 of Legislative Decree No. 58 of 24th February, 1998 (the "Financial Services Act") and Article 33, first paragraph, of CONSOB Regulation No. 11971 of 14 May 1999, as amended.

Any offer, sale or delivery of the Instruments or distribution of copies of the Base Prospectus or any other document relating to the Instruments in the Republic of Italy under (a) or (b) above must be:

(i) made by an investment firm, bank or financial intermediary permitted to conduct such activities in the Republic of Italy in accordance with the Financial Services Act and Legislative Decree no. 385 of 1 September 1993 (the "Banking Act"); and

(ii) in compliance with Article 129 of the Banking Act and the implementing guidelines of the Bank of Italy, as amended from time to time, pursuant to which the issue or the offer of securities in the Republic of Italy may need to be preceded and followed by an appropriate notice to be filed with the Bank of Italy depending, inter alia, on the aggregate value of the securities issued or offered in the Republic of Italy and their characteristics; and

(iii) in compliance with any other applicable laws and regulations.

The Republic of France

The Instruments are being issued and listed outside the Republic of France and have not been offered and will not be offered, directly or indirectly, to the public in the Republic of France and this Base Prospectus or

65

any other offering material relating to the Instruments has not been distributed or caused to be distributed and will not be distributed or caused to be distributed to the public in the Republic of France.

The Instruments may be offered within the Republic of France to qualified investors (investisseurs qualifiés) or (ii) a restricted group of investors (cercle restreint d'investisseurs) all as defined in and in accordance with, articles L.411-1 and L.411-2 of the French Code monetaire et financier and decret No. 98-880 dated 1st October, 1988.

General

Except as set forth in the applicable Final Terms, no action has been or will be taken in any country or jurisdiction by the Issuer or the Dealers that would permit a public offering of Instruments, or possession or distribution of the Base Prospectus or any other offering material in relation thereto, in any country or jurisdiction where action for that purpose is required. Each Dealer represents and agrees, and each further Dealer will represent and agree, that it will comply to the best of its knowledge and belief with all applicable laws and regulations in each country or jurisdiction in or from which it purchases, offers, sells or delivers Instruments or has in its possession or distributes the Base Prospectus or any other offering material, and has or will obtain any consent, approval or permission required by it for the purchase, offer or sale by it of the Instruments under the laws and regulations in force in any country or jurisdiction to which it is subject or in which it makes such purchases, offers or sales, in all cases at its own expense.

The Dealership Agreement provides that the Dealers shall not be bound by any of the restrictions relating to any specific jurisdiction (set out above) to the extent that such restrictions shall, as a result of change(s) or change(s) in official interpretation, after the date hereof, in applicable laws and regulations, no longer be applicable but without prejudice to the obligations of the Dealers described in the paragraph above headed "General".

Selling restrictions may be supplemented or modified with the agreement of the Issuer. Any such supplement or modification will be set out in the relevant Final Terms (in the case of a supplement or modification relevant only to a particular Tranche of Instruments) or (in any other case) in a supplement to this document.

HSBC Holdings is the ultimate parent of both HSBC Finance and HSBC Bank plc.

66

GENERAL INFORMATION

1. Application has been made to list Instruments issued under the Program on the Luxembourg Stock Exchange. The Luxembourg Stock Exchange has allocated the Program the number 11216 for listing purposes. Prior to the listing of any Instruments, the constitutional documents of the Issuer and the legal notice relating to the issue will be lodged with the Luxembourg Trade and Companies Register (Registre de Commerce de société à Luxembourg), where copies of these documents may be obtained upon request.

However, Instruments may be issued pursuant to the Program which will not be listed on the Luxembourg Stock Exchange or any other stock exchange or which will be listed and/or admitted to trading on or by such stock exchange and/or market as the Issuer and the relevant Dealer(s) may agree.

2. The Program has been established and Instruments will be issued thereunder pursuant to authority granted by the Board of Directors of the Issuer adopted on 1 May 1996, 18 February 1997, 12 March 1998, 23 April 1999, 20 May 2002, 16 May 2003 and 9 November 2004. The Issuer has obtained or will obtain from time to time all necessary consents, approvals and authorizations in connection with the issue and performance of the Instruments.

3. The Instruments have been accepted for clearance through Euroclear and Clearstream, Luxembourg. The appropriate Common Code and the International Securities Identification Number in relation to the Instruments of each Series will be specified in the Final Terms relating thereto. The relevant Final Terms shall specify any other clearing system as shall have accepted the relevant Instruments for clearance together with any further appropriate information.

The address of Euroclear is 1 Boulevard du Roi Albert II, B-1210 Brussels, Belgium and the address of Clearstream, Luxembourg is 42 Avenue JF Kennedy, L-1855 Luxembourg.

4. Bearer Instruments (other than Temporary Global Instruments) and any Talons, Receipts or Coupons appertaining thereto will bear a legend substantially to the following effect: "Any United States person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code." The sections referred to in such legend provide that a United States person who holds a Bearer Instrument, Talon, Receipt or Coupon generally will not be allowed to deduct any loss realized on the sale, exchange or redemption of such Bearer Instrument, Talon, Receipt or Coupon and any gain (which might otherwise be characterized as capital gain) recognized on such sale, exchange or redemption will be treated as ordinary income.

5. Settlement arrangements will be agreed between the Issuer, the relevant Dealer and the Fiscal Agent or, as the case may be, the Registrar in relation to each Tranche of Instruments.

6. European Union Savings Tax Directive

Under the European Union Council Directive 2003/48/EU on the taxation of savings income, Member States of the European Union are required to provide to the tax authorities of another Member State details of payments of interest (or similar income) paid by a person within its jurisdiction to an individual resident in that other Member State. However, for a transitional period, Belgium, Luxembourg and Austria are instead required (unless during that period they elect otherwise) to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). A number of non-European Union countries and territories, including Switzerland, have agreed to adopt similar measures (a withholding system in the case of Switzerland).

7. Other than as described by the Issuer in this Base Prospectus and the documents incorporated by reference herein, neither the Issuer nor any subsidiary is or has been involved in any governmental, legal or arbitration proceedings, nor to the Issuer's knowledge, are any governmental, legal or arbitration proceedings pending or threatened involving the Issuer or any subsidiary, which may have or have had during the 12 months prior to the date of this Base Prospectus a significant effect on the financial position or profitability of the Issuer and its subsidiaries on a consolidated basis. For further

67

information about HSBC Finance's governmental, legal or arbitration proceedings, see "Legal Proceedings" on pages 15-17 of the 2004 Annual Report.

8. Since December 31, 2004, the last day of the financial period in respect of which the most recent audited financial statements of the Issuer has been prepared, there has been no significant change in the financial or trading position nor any material adverse change in the financial position or prospects of the Issuer and its subsidiaries taken as a whole other than as described by the Issuer herein and in the Quarterly Reports on Form 10-Q of the Issuer for the quarters ended March 31, 2005 and June 30, 2005.

9. The consolidated financial statements of the Issuer as of December 31, 2004 and December 31, 2003 and for the year ended December 31, 2004 and for the period January 1, 2003 through March 28, 2003, and for the period March 29, 2003 through December 31, 2003, and for the year ended December 31, 2002 have been audited by KPMG LLP, an independent registered public accounting firm, and an unqualified opinion has been reported thereon. KPMG LLP is a member of the American Institute of Certified Public Accountants and is regulated by the U.S. Public Company Accounting Oversight Board.

10. For so long as the Program remains in effect or any Instruments shall be outstanding, copies (in English) of the following documents may be inspected (and, in the case of (b), (e) and (f), copies thereof obtained) during normal business hours at the specified office of the Paying Agent in Luxembourg, namely:

(a) the constitutional documents of the Issuer;

(b) this Base Prospectus and any document incorporated by reference therein;

(c) the Issue and Paying Agency Agreement;

(d) the Dealership Agreement;

(e) (i) the most recent publicly available audited financial statements of HSBC Finance beginning with such financial statements as of December 31, 2004 and 2003, for the year ended December 31, 2004, for the period January 1, 2003 through March 28, 2003, for the period March 29, 2003 through December 31, 2003 and for the year ended December 31, 2002 contained in its Annual Report on Form 10-K, (ii) the publicly available unaudited financial statements (if any) and the publicly available interim quarterly financial statements of HSBC Finance included in its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005 and June 30, 2005, (iii) Current Reports on Form 8-K ("Current Report") filed on January 5, 2005, February 28, 2005 (two Current Reports filed on this date), May 16, 2005 (two Current Reports filed on this date), June 22, 2005, July 1, 2005, August 1, 2005 (two Current Reports filed on this date) and August 4, 2005 (iv) the Report of Independent Registered Public Accounting Firm relating to the consolidated balance sheet of HSBC Finance (formerly Household International, Inc.) as of December 31, 2003 and related consolidated statements of income, changes in shareholder's(s') equity, and cash flows for the periods January 1, 2003 through March 28, 2003 and March 29, 2003 through December 31, 2003 and for the year ended December 31, 2002, and (v) the audited financial statements of HSBC Finance (successor by merger to Household Finance Corporation) as of December 31, 2003 and December 31, 2002, and for the period January 1, 2003 through March 28, 2003, and for the period March 29, 2003 through December 31, 2003, and for each of the years in the two-year period ended December 31, 2002 contained in its Annual Report on Form 10-K (but see "Restatement" on pages 6-7 of the 2004 Annual Report for further information about HSBC Finance's restatement of its financial statements as of December 31, 2003 and for the period March 29, 2003 through December 31, 2003); and

(f) any Final Terms relating to Instruments which are listed and/or admitted to trading on or by any stock exchange and/or market. (In the case of any Instruments which are not listed and/or admitted to trading on any stock exchange and/or market, copies of the relevant Final Terms will only be available for inspection by a Holder of such Instruments).

68

11. This Base Prospectus will be posted on the web site of the Luxembourg Stock Exchange.

69

REGISTERED OFFICE OF THE ISSUER

HSBC Finance Corporation 2700 Sanders Road

Prospect Heights, Illinois 60070

DEALERS

ABN AMRO Bank N.V. Banco Bilbao Vizcaya Argentaria, S.A. 250 Bishopsgate Alcala 16

London EC2M 4AA Madrid

Barclays Bank PLC Credit Suisse First Boston (Europe) Limited 5 The North Colonnade One Cabot Square

Canary Wharf London E14 4BB

Canary Wharf London E14 4QJ

Deutsche Bank AG, London Branch Fortis Bank nv-sa

Winchester House Montagne du Parc 3 1 Great Winchester Street B-1000 Brussels

London EC2N 2DB

HSBC Bank plc ING Bank N.V. 8 Canada Square Financial Markets/TR 00.21 London E14 5HQ Foppingadreef 7

1102BD Amsterdam Zuidoost

J.P. Morgan Securities Ltd. Landesbank Baden-Württemberg 125 London Wall Am Hauptbahnhof 2

London EC2Y 5AJ

70173 Stuttgart

Merrill Lynch International Morgan Stanley & Co. International Limited Merrill Lynch Financial Centre 25 Cabot Square

2 King Edward Street Canary Wharf London EC1A 1HQ

London E14 4QA

UBS Limited 1 Finsbury Avenue London EC2M 2PP

70

AUDITORS OF THE ISSUER

KPMG LLP 303 East Wacker Drive Chicago, Illinois 60601

FISCAL AGENT, PRINCIPAL PAYING AGENT and PRINCIPAL REGISTRAR

HSBC Bank plc Level 24

8 Canada Square London E14 5HQ

FIRST ALTERNATIVE REGISTRAR

HSBC Bank USA, National Association 452 Fifth Avenue

New York, New York 10018

SECOND ALTERNATIVE REGISTRAR

Dexia Banque Internationale à Luxembourg, société anonyme 69, route d'Esch

L-2953 Luxembourg

PAYING AGENT

Dexia Banque Internationale à Luxembourg, société anonyme 69, route d'Esch

L-2953 Luxembourg

LEGAL ADVISERS

To the Issuer To the Dealers as to United States Law as to United States Law

Patrick D. Schwartz, Esq. Sidley Austin Brown & Wood 2700 Sanders Road Woolgate Exchange

Prospect Heights, Illinois 60070 25 Basinghall Street London EC2V 5HA

To the Dealers as to United States Federal Income Tax Law

Sidley Austin Brown & Wood LLP Bank One Plaza

10 South Dearborn Street Chicago, Illinois 60603

LUXEMBOURG LISTING AGENT

Dexia Banque Internationale à Luxembourg, société anonyme 69, route d'Esch

L-2953 Luxembourg

71