Lawsuit reveals widespread misconduct at major lender, puts home loans at risk
By
Gian T
- Replies 11
If you’ve ever taken out a home loan, you know just how much trust you’re placing in your lender.
After all, for most Aussies, a mortgage is the most significant financial commitment we’ll ever make.
So, it’s more than a little unsettling to hear that one of the country’s best-known lenders, RAMS (owned by Westpac), is now at the centre of a significant legal storm over alleged systemic misconduct in its home loan business.
The Australian Securities and Investments Commission (ASIC), our national corporate watchdog, has launched legal action against RAMS, accusing the lender of widespread failures in its supervision of franchisees.
According to ASIC, between June 2019 and April 2023, RAMS staff and franchisees engaged in a range of dodgy practices, including:
If you’re wondering why this is such a big deal, consider this: when lenders approve loans based on dodgy paperwork, it means people might be getting mortgages they can’t afford.
That’s a recipe for financial stress, defaults, and even losing your home. Plus, it can drive up costs for everyone else as banks try to cover their losses.
ASIC’s deputy chair, Sarah Court, didn’t mince words, calling it a 'systemic organisational governance failure' and saying RAMS 'allowed years of unlawful conduct to occur across its franchises.' Ouch.
In August 2024, Westpac announced it would close RAMS to new home loan applications, folding its existing loans into the broader Westpac group.
So, if you already have a RAMS loan, you’ll still be looked after—but the brand itself won’t be taking on new customers.
Westpac has said it’s set aside enough money to cover any penalties or compensation that might come out of the court case, and RAMS has admitted liability and already started compensating affected customers.
This isn’t the first time the use of 'referrers' or 'introducers' has come under fire.
The Banking Royal Commission previously slammed similar programs at other banks, where unlicensed third parties were paid to bring in new business—sometimes without proper checks or oversight.
ASIC alleges RAMS also dealt with unlicensed referrers, raising more questions about how widespread these practices might be across the industry.
If you have a RAMS home loan, there’s no need to panic—but it’s a good idea to:
This case is a timely reminder that, even in 2024, we can’t always assume our banks and lenders are doing the right thing behind the scenes.
It pays to stay informed, ask questions, and maintain accurate records of your financial transactions.
Have you ever had a strange experience with a lender, or do you have concerns about your home loan? We’d love to hear your stories and tips—share your thoughts in the comments below, and let’s help each other stay savvy and safe in the world of finance!
After all, for most Aussies, a mortgage is the most significant financial commitment we’ll ever make.
So, it’s more than a little unsettling to hear that one of the country’s best-known lenders, RAMS (owned by Westpac), is now at the centre of a significant legal storm over alleged systemic misconduct in its home loan business.
The Australian Securities and Investments Commission (ASIC), our national corporate watchdog, has launched legal action against RAMS, accusing the lender of widespread failures in its supervision of franchisees.
According to ASIC, between June 2019 and April 2023, RAMS staff and franchisees engaged in a range of dodgy practices, including:
- Submitting fake pay slips as part of mortgage applications
- Fiddling with customers’ debts and expenses to make them appear more eligible for loans
- Even manufacturing fake contracts of sale for homes
If you’re wondering why this is such a big deal, consider this: when lenders approve loans based on dodgy paperwork, it means people might be getting mortgages they can’t afford.
That’s a recipe for financial stress, defaults, and even losing your home. Plus, it can drive up costs for everyone else as banks try to cover their losses.
ASIC’s deputy chair, Sarah Court, didn’t mince words, calling it a 'systemic organisational governance failure' and saying RAMS 'allowed years of unlawful conduct to occur across its franchises.' Ouch.
In August 2024, Westpac announced it would close RAMS to new home loan applications, folding its existing loans into the broader Westpac group.
So, if you already have a RAMS loan, you’ll still be looked after—but the brand itself won’t be taking on new customers.
This isn’t the first time the use of 'referrers' or 'introducers' has come under fire.
The Banking Royal Commission previously slammed similar programs at other banks, where unlicensed third parties were paid to bring in new business—sometimes without proper checks or oversight.
ASIC alleges RAMS also dealt with unlicensed referrers, raising more questions about how widespread these practices might be across the industry.
- Review your loan documents and make sure everything looks above board
- Contact RAMS or Westpac if you have concerns or think you might have been affected
- Keep an eye out for any communication about compensation or changes to your loan
This case is a timely reminder that, even in 2024, we can’t always assume our banks and lenders are doing the right thing behind the scenes.
It pays to stay informed, ask questions, and maintain accurate records of your financial transactions.
Key Takeaways
- ASIC is taking legal action against Westpac-owned RAMS, alleging the brand engaged in systemic misconduct in arranging home loans, including use of fake documents and altering customer information.
- It’s claimed that RAMS failed to properly supervise its franchise network, leading to years of unlawful behaviour such as 'liar loans' being issued to unqualified customers and boosting franchisee commissions.
- RAMS has admitted liability for these breaches and says it has already compensated customers who were affected by the misconduct.
- Westpac has closed RAMS to new home loan applications from August 2024 and says it will work with ASIC to resolve the matter, expecting current provisions to cover any penalties.