ASIC sues Westpac subsidiary RAMS for systemic home loan misconduct and credit law breaches

The Australian Securities and Investments Commission has initiated civil penalty proceedings in the Federal Court against RAMS Financial Group, alleging systemic misconduct in the arrangement of home loans between June 2019 and April 2023.

RAMS, a wholly owned subsidiary of Westpac Banking (ASX:WBS), has admitted to breaching its obligations as an Australian credit licensee.

ASIC claims RAMS dealt with unlicensed individuals, failed to properly supervise its representatives, and lacked adequate policies and procedures, leading to widespread misconduct across its franchise network in breach of the National Consumer Credit Protection Act 2009.

According to ASIC Deputy Chair Sarah Court, "This is a systemic organisational governance failure. RAMS allowed years of unlawful conduct across its franchises, enabling loans to be approved for customers who may not have otherwise qualified."

Investigations found franchise staff submitted falsified payslips, altered financial details, and even fabricated contracts of sale to push loan approvals and increase franchisee commissions.

ASIC alleges RAMS contravened multiple sections of the Credit Act by failing to ensure compliance with credit laws, not managing conflicts of interest, and not operating efficiently, honestly, and fairly.

RAMS has accepted liability for the breaches and has remediated affected customers. ASIC is now seeking declarations and financial penalties.

RAMS previously operated under a franchise model, targeting first-home buyers and self-employed borrowers.

In August 2024, Westpac announced the closure of the RAMS business, with its $31.8 billion loan book absorbed into Westpac's portfolio.