In Australian Securities and Investments Commission v RAMS Financial Group Pty Ltd (Penalty) [2025] FCA 1304 the Federal Court of Australia ordered RAMS Financial Group Pty Ltd (RAMS) to pay a $20 million penalty after RAMS admitted to widespread compliance failures in relation to arranging home loans.

The Court found that between June 2019 and April 2023, RAMS breached its obligations as an Australian Credit Licensee and contravened 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 supervise 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.

Whilst RAMS had policies and procedures in place, they were inadequate in several fundamental respects including in seeking to avoid conflicts of interest and breaches of privacy.

The Court held that RAMS failed to have in place effective processes and controls following internal findings of possible misconduct, which included instances of franchise staff submitting false pay slips from non-existent employers and altering customers’ liabilities and expenses to ensure loan applications were approved.

RAMS admitted liability and agreed with ASIC to pay a civil penalty of $20 million.

RAMS was a wholly-owned subsidiary of Westpac Banking Corporation (Westpac).

Westpac has now closed the RAMS Home Loan network.

The conduct did not relate to every RAMS Franchise.

Justice Shariff observed:

“the facts here establish that (as acknowledged by RFG and Westpac’s Board Risk Committee) the “root causes” of the contraventions were that RFG was conducted as an “autonomous business with a unique risk profile” which was borne of its franchise model, and, further, RFG had an immature risk culture, a deficient control environment and there was insufficient oversight of its non-standard methods of business. In the circumstances, it is important that the penalty to be imposed must serve the object of deterrence and promote compliance with the regulatory regime.”

RAMS has compensated customers who suffered losses because of the misconduct.

Separate Class Action Proceedings are continuing relating to RAMS’s conduct in terminating the franchise agreements of the RAMS Franchisees.

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