The former Westpac-owned lender has moved to resolve claims over terminated franchises and withheld trail commissions.
RAMS Financial Group has agreed to pay $29.62 million to settle a Federal Court class action brought by former franchisees in May 2024 who alleged the former Westpac-owned lender wrongfully terminated their agreements and withheld trail commissions.
The proposed settlement resolves claims brought by 15 group members against RAMS following the lender’s broad compliance crackdown and subsequent withdrawal from new lending.
Justice Michael Lee made orders in the Federal Court in Sydney on 18 September, recording the proposed settlement deed, and the deal was then approved at a final hearing on 19 October.
Under the deed, RAMS will pay a total of $29,624,397.67, comprising $7,783,183.14, including GST for 25 per cent trail commission withheld from the affected franchisees after their agreements were terminated; $1,042,234.01 in interest; and a further $20,798,980.52.
The 15 group members will share the settlement sum.
The court also ordered RAMS to offer the group members a buyout of their future trail commission entitlements within five business days of the court making settlement-approval orders.
The class action was funded by Court House Capital.
Claims centred on terminations and trail
The former franchisees alleged RAMS had breached contractual and statutory duties of good faith by ending their franchise agreements without proper cause.
They also challenged RAMS’ decision to withhold 25 per cent of their trail commissions after their agreements were terminated, arguing that the lender’s regulatory review unfairly affected businesses that had complied with its requirements.
RAMS has not admitted liability or wrongdoing as part of the proposed settlement.
The deal is significant as it moves to draw a financial line under a long-running dispute over two issues central to franchise businesses, this being the circumstances in which an agreement can be terminated and the treatment of trail revenue after termination.
Westpac announced in August that it had completed the sale of the RAMS residential mortgage portfolio to a consortium comprising Pepper Money, credit funds and accounts managed by KKR, and PIMCO-managed funds.
The portfolio was worth around $15.4 billion at completion, down from $21.4 billion when Westpac signed a binding agreement in November 2025 as loans continued to run off through repayments.
RAMS stopped accepting new lending through its franchise network in 2024 amid regulatory scrutiny of its credit controls.
In October 2025, the Federal Court ordered RAMS to pay a $20 million penalty after the company admitted widespread compliance failures in its home-loan operations.
ASIC said the failures, which occurred between June 2019 and April 2023, included dealing with unlicensed referrers, deficient conflict-of-interest arrangements and inadequate supervision of representatives.
The court also considered instances in which franchise staff submitted false payslips from non-existent employers or altered customer information to support loan approvals.
RAMS still faces a separate franchisee proceeding by Sech Finance and Daniel Lubarda, which was heard alongside the Top Ryde matter and remains before Justice Lee.
The Adviser has reached out to Westpac for comment.
[Related: RAMS hit with $20m penalty for home loan compliance failings]
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