ASIC has commenced civil penalty proceedings in the Federal Court against RAMS Financial Group (RAMS) for systemic misconduct in arranging home loans.
ASIC alleges RAMS breached its obligations as an Australian Credit Licensee and engaged in widespread unlicensed conduct between June 2019 and April 2023.
RAMS, a wholly owned subsidiary of Westpac Banking Corporation, 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.
'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.
'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.'
ASIC alleges RAMS contravened sections 31(1), 47(1)(a), (b), (d) and (e) of the Credit Act 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 comply with the credit legislation,
- failing to supervise representatives (that is, the RAMS representatives) to ensure compliance with credit laws (which included failures to create and enforce adequate policies and procedures, and failures to investigate misconduct), and
- failing to do all things necessary to ensure that the credit activities authorised by the licence are engaged in efficiently, honestly and fairly.
ASIC is seeking declarations and pecuniary penalties against RAMS.
The date for the first case management hearing is yet to be scheduled.
Background
RAMS is a wholly owned subsidiary of Westpac Banking Corporation. It operated as a standalone business within the Westpac Group, through a franchise network of independent franchisees and staff employed by them. RAMS provided credit services for RAMS-branded home loans (funded by Westpac) targeting first home buyers and self-employed borrowers. It holds an ACL authorising it to perform non-credit providing functions, including as a credit assistance provider.
On 6 August 2024, Westpac announced it would close the RAMS business including all franchisee offices, and that the $31.8 billion of existing RAMS loans would be absorbed into Westpac's loan book.
RAMS has admitted liability for the contraventions. RAMS has remediated customers that have suffered detriment arising from the misconduct.
ASIC's Moneysmart website provides useful information for consumers about choosing a home loan.
