Westpac’s RAMS Faces ASIC Lawsuit Over Systemic Misconduct in Home Loans
Westpac’s mortgage broking subsidiary RAMS is embroiled in a lawsuit initiated by the Australian Securities and Investments Commission (ASIC) due to allegations of "systemic misconduct" associated with the arrangement of home loans. The allegations suggest that staff members at RAMS engaged in appalling practices, including the fabrication of pay slips and the alteration of expenses and liabilities to secure loan approvals.
ASIC claims that from June 2019 to April 2023, RAMS violated its obligations as an Australian Credit Licensee and was involved in widespread misconduct, including dealings with unlicensed individuals. RAMS has conceded that it operated with unlicensed persons, mismanaged supervision of representatives, and lacked sufficient policies and procedures to ensure compliance.
ASIC Deputy Chair Sarah Court characterised the situation as a "systematic organisational governance failure" at RAMS, accentuating that the company neglected to properly oversee its franchise network. Court stated, “RAMS allowed years of unlawful conduct to occur across its franchises, creating opportunities for loans to be provided to customers who may not have qualified otherwise, thereby boosting commissions earned by RAMS franchisees.”
In response, ASIC is seeking penalties against RAMS for its activities. Until recently, RAMS operated as a separate entity within Westpac, leveraging a franchise network of independent franchisees that facilitated RAMS-branded home loans, all of which were backed by Westpac. Established in 1991, RAMS was acquired by Westpac in 2007 for $140 million.
In August 2024, Westpac made the announcement that it would cease operations of the RAMS brand, including all franchise offices, meaning that the existing $31.8 billion in RAMS loans would be merged into Westpac’s loan portfolio. RAMS has accepted responsibility for its contraventions and has since worked to remedy the situation for affected customers.
In a formal statement, Westpac expressed its commitment to cooperating with ASIC to expediently resolve the ongoing legal proceedings.
