The Australian Securities and Investments Commission (ASIC) has initiated civil penalty proceedings against RAMS Financial Group, alleging systemic misconduct in the arrangement of home loans. The alleged misconduct took place between June 2019 and April 2023.

RAMS is accused of breaching its obligations as an Australian Credit Licensee and engaging in unlicensed conduct. The company has admitted to conducting business with unlicensed persons and failing to properly supervise its representatives. The misconduct reportedly involved RAMS franchisees and their staff submitting false pay slips and altering customers' financial information to meet loan serviceability requirements.

ASIC claims that RAMS contravened sections 31(1), 47(1)(a), (b), (d), and (e) of the National Consumer Credit Protection Act 2009. The regulatory body is seeking declarations and pecuniary penalties against RAMS. The first case management hearing date is yet to be scheduled.

"This is a systemic organisational governance failure by RAMS who did not adequately supervise its franchise network," said ASIC Deputy Chair Sarah Court. "RAMS allowed years of unlawful conduct to occur across its franchises, creating the opportunity for loans to be provided to customers who otherwise may not have qualified for those loans, and thereby increasing commissions earned by RAMS franchisees."

Court further stated, "RAMS franchise staff were found to have submitted false pay slips from non-existent employers and altered customers’ liabilities and expenses to enable them to meet serviceability requirements to get the loan application over the line, while in another example a RAMS franchise employee was found to be involved in manufacturing a fake contract of sale for a home."

RAMS is a wholly owned subsidiary of Westpac Banking Corporation. Westpac announced the closure of the RAMS business on 6 August 2024, with existing loans to be absorbed into Westpac's loan book. RAMS has admitted liability for the contraventions and has remediated affected customers.

Westpac issued a statement acknowledging the agreement with ASIC and expects existing provisions to cover the financial outcome of the proceedings.

"Westpac has announced today that its subsidiary, RAMS Financial Group Pty Limited (RFG), has reached agreement with ASIC to resolve ASIC’s investigation into the RAMS business through agreed civil penalty proceedings filed in the Federal Court.

"The proceedings relate to RFG’s oversight of conduct of RAMS franchisees and their employees who were authorised credit representatives of RFG between 3 June 2019 to 30 April 2023. ASIC and RFG have prepared a Statement of Agreed Facts and Admissions.

"RFG will continue to work cooperatively with ASIC to resolve the proceedings as quickly as possible. Westpac expects existing provisions should be sufficient to meet the financial outcome of the proceedings, subject to court approval."