The Federal Court has found the Westpac-owned subsidiary breached its obligations as an Australian credit licensee and contravened the Credit Act.
RAMS Financial Group (RAMS) has been ordered by the Federal Court to pay a $20 million penalty after admitting to widespread compliance failures in arranging home loans.
The Federal Court found that the Westpac-owned mortgage provider breached its obligations as an Australian credit licensee and contravened the National Consumer Credit Protection Act between June 2019 and April 2023 by:
- Dealing with unlicensed referrers.
- Failing to have in place adequate arrangements to ensure that customers were not disadvantaged by any conflicts of interest.
- Failing to supervise RAMS representatives to ensure compliance with credit laws (which included failures to create and enforce adequate policies and procedures, and failures to investigate misconduct).
- Failing to do all things necessary to ensure that the credit activities authorised by the licence are engaged in efficiently, honestly, and fairly.
The court also found RAMS had failed to implement effective processes and control after internal reviews flagged potential misconduct, including franchise staff submitting false payslips from non-existent employers and altered customers’ liabilities and expenses to push loan applications through.
Australian Securities and Investment Commission (ASIC) deputy chair Sarah Court said: “Financial entities must adhere to their obligations under the law and consumers must be protected from lending practices which can expose them to harm.
“ASIC will continue to scrutinise those involved in the whole home lending process and will hold financial institutions accountable for misconduct.”
In handing down his decision, Justice Shariff found “the contraventions here were serious in that they pertained to obligations that are designed to proscribe unlicensed and other related conduct that is essential to protect consumers and to regulate industry participants including the representatives of licensees.”
Further, his honour stated: “I am satisfied that [RAMS’] contravening conduct exposed consumers to a risk of loss that the loans they entered may not have been suitable for their circumstances which also exposed them to a risk that they may have been unable to service their loans without substantial hardship, or may have defaulted on their loan repayments and incurred fees or charges, as a consequence of those defaults.”
Background to the case
RAMS operated as a stand-alone business within the Westpac Group through a network of independent franchisees and their staff.
The business provided RAMS-branded home loans, primarily targeting first home buyers and self-employed borrowers, and holds an ACL authorising it to perform non-credit providing functions, including acting as a credit assistance provider.
In early 2024, Westpac began a sale process for RAMS, but terminated it in April 2024, subsequently commencing a full wind-down of the business.
The RAMS Franchise Network was completely closed by 6 August 2024.
Earlier this year, ASIC filed proceedings against RAMS for “systemic misconduct” in arranging home loans. RAMS admitted liability and has since remediated customers who suffered detriment as a result of the misconduct, according to ASIC.
Speaking to The Adviser, a Westpac spokesperson acknowledged the court’s ruling.
“On Friday the Court made orders consistent with the joint position put forward by ASIC and Westpac subsidiary RAMS Financial Group Pty Limited (RFG),” they said.
“RFG will pay a civil penalty of $20m plus costs, resolving ASIC’s investigation into RFG. The penalty was provisioned and included in Westpac’s 2025 Half Year Results.
“RFG completed customer remediation in 2024 and cooperated with ASIC throughout the investigation.
“The RAMS business was closed to new home loan applications from 6 August 2024. RAMS customers continue to access services through the RAMS app, website and call centre.”
