ASIC vs Westpac: RAMS Financial Group sued by regulator over home loan misconduct
The financial regulator will take mortgage company RAMS, a wholly-owned subsidiary of Westpac, to court for 'systemic misconduct' in arranging home loans, including doctoring payslips and expenses.
The Australian Securities and Investment Commission (ASIC) alleges RAMS breached its obligations as a lender, failing to perform proper oversight of franchisees from June 2019 and April 2023, resulting in 'widespread misconduct'.
ASIC alleges RAMS' franchisees submitted false pay slips from non-existent employers and altered customers' liabilities and expenses to enable them to meet loan serviceability requirements. In another example, a RAMS franchise employee was found to be involved in manufacturing a fake contract of sale for a home.
'This is a systemic organisational governance failure by RAMS, who did not adequately supervise its franchise network,' ASIC Deputy Chair Sarah Court said.
'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, founded 33 years ago, became one of the most prominent non-bank lenders and was instrumental in shaking up the banks' stranglehold on the mortgage market.
The company was purchased by Westpac in 2008, when it hit financial pressure during the Global Financial Crisis.
Westpac had tried to offload the company but the investigation by ASIC, launched in May 2024, scuppered those plans.
In August 2024, Westpac closed the RAMS business, including shutting down all franchisee offices, absorbing the $31.8 billion mortgage book.
RAMS has admitted liability for contravening the Credit Act, and completed a remediation program.
Westpac said it would work cooperatively with ASIC to resolve the proceedings and 'expects existing provisions should be sufficient to meet the financial outcome of the proceedings, subject to court approval.'
ASIC is seeking 'pecuniary penalties', with the first hearing yet to be scheduled.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
ABC News
a day ago
- ABC News
Collapsed international student agency GrowPro Experience may have traded while insolvent
An international student agency that collapsed in late February may have been trading while insolvent for more than a year, the liquidator believes. In a statutory report to creditors, liquidator Joshua Taylor estimated GrowPro Experience Pty Ltd owed more than $2.74 million to creditors, including roughly $450,000 to the Australian Tax Office. His report contained preliminary findings and noted further investigations were required. In the report, Mr Taylor stated he was considering reporting alleged breaches in director duties including allegations of failure to use care and diligence, failure to act in good faith, and insolvent trading, possibly opening directors to being personally pursued for money owed to creditors. "Upon the completion of my investigations into the affairs of the Company, I will lodge my report to the ASIC (Australian Securities and Investments Commission)," the report read. To date liquidators had identified 1,134 student clients owed refunds for education, visa and insurance services that were never delivered, with claims totalling about $870,000. Mr Taylor said many students had not lodged claims, and he estimated a true total of $2.4 million was owed back to these clients. The report, sent to creditors on May 26, stated most students — primarily from South America and Spain — would not be entitled to any refund. GrowPro's record keeping was also questioned in the report. The liquidator's report said the company's total assets were unknown because many schools recorded as owing commission payments challenged them, claiming students had not been enrolled or had withdrawn from the courses. GrowPro had two directors — Spain-based Antonio Llobet, known as Goiko, and Australia-based Paul Mansour. In the liquidator's report, the pair attributed the company's failure to increases in visa application fees, ministerial directions to reduce student numbers, and an uptick in visa refusals. Mr Taylor did not disagree with these being contributing factors, but pointed out GrowPro has made consistent trading losses since 2022. Mr Taylor told the ABC GrowPro paid its sales staff once students committed, and often before visas were approved or enrolment completed, which led to refunds being required if enrolments did not happen. GrowPro was criticised by students for only notifying them of the company's difficulties six weeks after its Spanish parent company had filed for voluntary administration and began insolvency proceedings, and for continuing to take payments after those proceedings had begun. Mr Taylor said Mr Mansour had minimal involvement in running the company, had no access to bank accounts, and only dealt with tax matters, and that Mr Llobet essentially ran the business. Mr Mansour declined to comment, but when the ABC approached him in early-March over the company's collapse he said he said he did not know what funds remained in the company bank accounts, what staff remained, or how many students were affected. Mr Llobet did not respond to requests for comment. A spokesperson for Australian Restructuring Insolvency and Turnaround Association (ARITA) said if a director had allowed insolvent trading a court could hold them responsible for debts incurred from the point of the company going insolvent. "It effectively pierces the corporate vale, and makes them have to pay," she said. Proving insolvent trading in court was a long and costly process, however, and liquidators had to consider whether directors had enough money to justify the action. There were defences in the Corporations Act directors could use to argue against liability for insolvent trading, such as being absent for medical reasons. There was no carve-out that exempted directors because they were not involved in the day-to-day running of the company. Mr Taylor previously told the ABC he was investigating "material amounts" of money transferred abroad to affiliated entities abroad. The new report revealed amounts transferred to related parties more than quadrupled between 2022 and 2024, jumping from just over $1.48 million to more than $7.9 million. The report noted Mr Llobet said all transactions were for "bona fide company expenses such as operational wages," but investigations continued into them. Mr Taylor told the ABC he had not ruled out pursuing either director to recover funds, and both would be asked for personal statements of their financial positions. With Mr Llobet having been more involved with running GrowPro's Australian entities, Mr Taylor said it was likely he would face particular scrutiny. The report read: "Upon completion of further investigations where I determine that there is a recoverable action against the director for insolvent trading or unreasonable director related transactions I shall be requesting the director to provide me with a personal statement of their financial position." The report noted a loan made from Mr Llobet to the company, which if verified may be able to be offset against any claims against him. Mr Taylor had conducted land title searches in New South Wales and found neither director owned property, and he said he was considering expanding his search to other states. Any legal action would likely depend upon funding from creditors.
News.com.au
a day ago
- News.com.au
ASX finishes lower despite lithium shares huge rally
Australia's sharemarket sea-sawed throughout Thursday's trading as the Commonwealth Bank continued its record march higher. The benchmark ASX 200 index basically traded flat, losing just 2.90 points or 0.03 per cent to 8,538.90. The broader All Ordinaries also finished marginally in the red down 1.60 points or 0.02 per cent to 8,768.90. The Aussie dollar temporarily jumped above 65 US cents, but slid throughout the day's trading and is now buying 64.99 US cents. Even with the minor falls, the market remains within 20 points of an all-time record close. On a relatively quiet day of trading seven of the 11 sectors were lower, with information technology, A-REITs, Materials and Telecommunications lifting the ASX. CBA continued its record run after a late surge saw Australia's largest bank add 0.13 per cent to $181.34. Westpac also gained 0.48 per cent to $33.26, while NAB shares slid 0.23 per cent to $38.51 and ANZ was basically flat losing 0.034 per cent to $29.63. Meanwhile healthcare heavyweight CSL fell 1.32 per cent to $242.96, while Prop Medicus fell 0.89 per cent to $280.82 and Telix Pharmaceuticals dropped 2.83 per cent to $26.43. Utilities shares also slumped. Origin Energy fell 1.31 per cent to $10.58, while AGL slipped 0.57 per cent to $10.39 and Meridian Energy dropped 2.09 per cent to $5.16. Thursday's trading came ahead of a number of key international events led by US President Donald Trump's much hyped call with China's leader Xi Jinping, a European Central Bank meeting and American non-farm payroll data. senior financial market analyst Kyle Rodda said the markets may hit a lull heading into the non-farm payrolls release, with the upcoming ECB decision also a potentially market moving event. 'The ECB is all but certain to cut rates. However, there's uncertainty about the guidance the central bank will deliver given the murky outlook for US trade policy and global growth,' he said. One of the bright spots was lithium stocks led by the resources sector on the back of the White House announced they are creating new grants to help Albemarle fund a new lithium processing facility. Mineral Resources surged 15.14 per cent to $23.26, Pilbara Minerals also soared 12.08 per cent to $1.34 and Liontown Resources jumped 5.25 per cent to $0.64. In company news, Toys R Us has announced it was going into voluntary administration. Toys R Us shares have immediately suspended from trading on the ASX pending further announcements. Shares in Tyro slumped 10.38 per cent to $0.82 with investors selling down the payments business on the back of chief executive and managing director Jon Davey announcing he was moving to a new role with a private equity business. Resimac shares also fell sharply on Thursday, although investors won't mind as the company is going to pay a fully franked special dividend of 12 cents per share. Catapult slipped 0.97 per cent to $6.16 after telling the market the company is purchasing US sports technology company Perch for $US18m ($AU27.70m).
News.com.au
2 days ago
- News.com.au
ASX closes on brink of record high, as CBA continues to soar
Australia's stock market soared to within one per cent of a record high as investors factored in interest rate cuts and the Commonwealth Bank became the first Australian company to surpass the $300bn market cap. The benchmark ASX 200 index gained 75.10 points or 0.89 per cent to 8,541.80 points while the broader all ordinaries also finished higher up 79.30 or 0.91 per cent to 8,770.20. The Australian dollar slid 0.09 per cent and is now buying 64.56 US cents. Wednesday's trading was dominated by CBA, which saw Australia's largest bank pass $181 a share for the first time. VanEck senior portfolio manager Cameron McCormack said CBA's 'remarkable' rally continued as the major bank passed a $300bn market cap, thanks to weaker resources stock. 'Particularly offshore investors looking at the Australian market are more likely to prefer the local banks as they tend to outperform when resources underperform,' he said. 'We are not looking at a reverse of that trend.' But CBA was not alone, with Westpac shares also rallying 1.47 per cent to $33.10 even though ASIC made the decision to start legal proceedings against subsidiary RAMS for alleged systemic misconduct. NAB also jumped 1.07 per cent to $38.60 and ANZ rose 0.95 per cent to $29.64. On an overall positive day, nine of the 11 sectors finished in the green led by energy, consumer discretionary and financial stocks. Woodside Energy rose 2.89 per cent to $22.80, Santos gained 0.92 per cent to $6.59 and Yancoal Australia added 1.93 per cent to $5.29. Wesfarmers shares gained 0.59 per cent to $84.60, JB Hi Fi rallied 2.05 per cent to $112.24 and Harvey Norman jumped 2.98 per cent to $5.53. Australia's share market followed a late rally on Wall Street overnight on better than expected US job openings which showed businesses were looking for 7.4 million staff members in April. A strong lead in from Wall Street and worse than expected ABS data which showed Australia is back in a GDP per capita recession helped boost the local market. Mr McCormack said the market reacted positively to a GDP print showing economic growth of just 0.2 per cent for the quarter or 1.3 per cent for the year. 'The market is starting to price in more rate cuts on the back of some of the softer data coming through, including the weaker export data,' he said. In company news Virgin Australia announced plans to return to the ASX via a $685m initial public offering. The IPO priced at $2.90 per share and if the shares are fully subscribed will re-list at a market value of around $2.3bn. Japanese entertainment giant MIXI has upped its bid to buy Australian gambling company Pointsbet and is now offering $402m to take over the company. Shares in Pointsbet rallied 10.60 per cent to $1.20. Fashion-forward jewellery and accessories brands Lovisa announced a change in leadership with Mark McInnes moving into the role of executive deputy chairman. Shared surged 9.10 per cent to $32 on the announcement. DroneShield shares marched higher up 12.50 per cent to $1.58 on news the UK government is planning on spending GBP 2bn or $AU4.2bn to boost its drone technology in an effort to boost its military capabilities.
