Banking giant's mortgage unit admits failures in supervision and compliance frameworks
Westpac’s subsidiary RAMS Financial Group has reached an agreement with the Australian Securities and Investments Commission (ASIC) to address a regulatory investigation into its mortgage practices.
The bank confirmed that RAMS has finalised a remediation program and remains in discussions with the corporate watchdog to resolve the legal proceedings as quickly as possible, according to a statement released on Wednesday.
The development follows ASIC’s announcement that it had initiated civil proceedings in the Federal Court, accusing RAMS of systemic failures in home loan arrangements. The regulator claims the company breached its obligations as a licensed credit provider and carried out unlicensed activity between June 2019 and April 2023.
“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.
“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 has acknowledged that it operated with unlicensed individuals, did not adequately oversee its representatives, and lacked sufficient policies and procedures – failings that led to extensive misconduct by its franchisees and their staff, breaching the National Consumer Credit Protection Act 2009.
Westpac stopped accepting new home loan applications through RAMS in August 2024. The lender has since started transferring RAMS’ $31.8 billion mortgage portfolio into its core banking operations.
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