ASIC Pursues Legal Action Against RAMS for Loan Misconduct – Money Advice Experts in Services

The Australian Securities and Investment Commission (ASIC) is taking legal action against RAMS Financial Group, a subsidiary of Westpac, for alleged misconduct related to home loans. The regulator accuses RAMS of systemic wrongdoing, including falsifying documents such as payslips and expenses to facilitate loan approvals. This misconduct allegedly occurred over several years, indicating a failure in oversight by RAMS.

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According to ASIC, RAMS franchisees were involved in deceptive practices, submitting false information to meet loan requirements. This included creating fake pay slips from non-existent employers and altering customers’ financial details. In one instance, an employee was found to have fabricated a home sale contract. ASIC Deputy Chair Sarah Court criticized RAMS for not properly supervising its franchise network, allowing unlawful activities to persist.

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RAMS, established 33 years ago, played a significant role in diversifying the mortgage market as a non-bank lender. However, financial pressures during the Global Financial Crisis led Westpac to acquire the company in 2008. Despite attempts to sell RAMS, ASIC’s investigation in May 2024 resulted in Westpac closing the business in August 2024 and absorbing its mortgage portfolio.

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RAMS has acknowledged breaching the Credit Act and has undertaken remediation efforts. Westpac stated its cooperation with ASIC to address the legal proceedings and expects to cover any financial implications. ASIC is seeking penalties for the misconduct, with a court hearing pending.

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The legal action against RAMS highlights the importance of regulatory compliance in the financial sector. Industry experts emphasize the need for stringent oversight to prevent fraudulent activities that could harm consumers and undermine the integrity of the lending system. The case serves as a warning to financial institutions about the consequences of inadequate governance and supervision.

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As the investigation unfolds, the outcome will likely impact the practices and policies of mortgage lenders in Australia. The incident underscores the significance of maintaining ethical standards and transparency in the lending industry to safeguard the interests of borrowers and maintain trust in financial institutions.

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With the financial sector facing increased scrutiny and regulatory enforcement, institutions must prioritize compliance and risk management to mitigate potential legal and reputational risks. The RAMS case serves as a cautionary tale for lenders to uphold ethical standards and regulatory requirements to ensure the stability and credibility of the mortgage market.

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