ASIC Sues RAMS for Widespread Home Loan Fraud Spanning Four Years

Photo by Tierra Mallorca on Unsplash

What happened : Australia's corporate regulator has launched civil penalty proceedings against RAMS Financial Group for systemic misconduct in home loan arrangements that spanned nearly four years. The Australian Securities and Investments Commission (ASIC) filed Federal Court action on June 4, alleging RAMS breached its credit licensing obligations and engaged in widespread unlicensed conduct between June 2019 and April 2023. RAMS, a wholly owned Westpac subsidiary, has admitted liability for the contraventions.

Why it matters: This case exposes how Australia's franchise-based lending model can create perverse incentives that directly harm borrowers while enriching intermediaries. ASIC Deputy Chair Sarah Court described it as "systemic organisational governance failure" where RAMS allowed years of unlawful conduct across its franchise network, creating opportunities for loans to customers who otherwise wouldn't qualify—thereby boosting commission payments to franchisees.

The misconduct wasn't limited to paperwork violations. ASIC alleges franchise staff submitted false pay slips from non-existent employers, altered customers' liabilities and expenses to meet serviceability requirements, and in one case, manufactured a fake property contract of sale. These practices potentially trapped borrowers in loans they couldn't afford while generating fees for the lender network.

For the broader banking sector, this represents another reputational blow to Westpac, which has faced repeated regulatory action over compliance failures. The timing is particularly awkward given the bank's ongoing efforts to rebuild trust following the banking royal commission findings.

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