Westpac’s RAMS subsidiary has admitted liability for numerous breaches of its obligations as an Australian Credit Licensee and engaging in widespread unlicensed conduct between June 2019 and April 2023.
ASIC yesterday said it has commenced civil penalty proceedings in the Federal Court against RAMS Financial Group “for systemic misconduct in arranging home loans.”
Westpac said that RAMS Financial Group Pty Limited “reached agreement with ASIC to resolve ASIC’s investigation into the RAMS business through agreed civil penalty proceedings filed in the Federal Court.”
ASIC said that RAMS “admits that it conducted business with unlicensed persons, failed to supervise its representatives properly and failed to have adequate policies and procedures in place, resulting in widespread misconduct by its franchisees and their staff, in breach of the National Consumer Credit Protection Act 2009.”
ASIC Deputy Chair Sarah Court said, “This is a systemic organisational governance failure by RAMS who did not adequately supervise its franchise network.”
Investors can only wonder; which other facets of Westpac’s business have been (or are being) as badly managed as RAMS?
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The Statement of Agreed Facts and Admissions on Liability published yesterday is a disconcerting read.
The documented misconduct covers a 5-year period from at least 1 January 2018 to April 2023 involves staff, including RAMS Franchisees and Loan Writers, at 12 RAMS Franchises.
These were; the St George, South Melbourne, Liverpool, Sydney CBD, Melbourne North East, Norwest, Alphington, Ryde, Fairfield, Inner West, Auburn Granville and Marrickville franchises.
In many cases loan applications were supported by false documentation such as fabricated payslips.
RAMS also frequently accepted referrals from unaccredited referrers.
In some cases, referrers were owned by or controlled by the RAMS franchisee, thus illicitly earning commissions.
Franchisees would also falsify declared expenses on loan applications.
There are also instances of franchisees making loan repayments on loans that were in arrears and thus continuing to earn commissions on those loans.
Westpac appears to have not commenced any serious investigation into RAMS until July 2020, and sampling of loan applications by the fraud team commenced in mid 2022. Westpac bought RAMS in late 2007.
A wider deep dive by Westpac, dubbed “Project Guardian” commenced in November 2022 and cost the bank $46 million.
The findings and implications of these reviews took a long time (nearly a year) to work their way up the chain to the Westpac Board Risk Committee.
Westpac wound down the RAMS Franchise Network in its entirety, effective 6 August 2024.
Westpac said it expects existing provisions “should be sufficient to meet the financial outcome of the proceedings, subject to court approval.”
RAMS has a mortgage book of $26 billion, representing 5% of the bank’s mortgages as of March 2025.