ASIC and Austrac close in on Westpac’s RAMS home loans

Westpac has moved to shut down RAMS, with concerns its lending subsidiary wrote bad loans now seeing the banking major embroiled in regulatory probes.

Westpac has moved to shut down RAMS, with concerns its lending subsidiary wrote bad loans now seeing the banking major embroiled in regulatory probes. Picture: NewsWire / Simon Bullard.

Australia’s peak financial regu­lators are turning the screws on Westpac’s RAMS Home Loans, with a Freedom of Information ­request revealing two watchdogs trading key information in February ahead of an expected decision to take court action over serious concerns.

Searches of the Australian Securities & Investments Commission’s systems reveal the regulator swapped four key bundles of information about RAMS in February with fellow regulator the Australian Transaction Reports and Analysis Centre, which polices Australia’s money-laundering laws.

In response to a FOI request by The Australian, ASIC revealed its investigators handed Austrac four key documents in February as part of a trade of two emails, the only two times the agencies corresponded about RAMS over the 15 months to March this year.

This comes as ASIC prepares to make a decision on its looming investigation into RAMS, with a decision around the commission’s probe into the home lender expected soon.

ASIC has been running a review of RAMS since last September. Austrac is also closely watching the wind-down of the home lender, with allegations of criminal conduct flying in court with a former Westpac staffer.

ASIC has been probing RAMS home lending, amid suspicion the company’s franchisees have been breaching their lending obli­gations, making inappropriate home loans to customers.

Westpac revealed last year that ASIC was closely looking at loans made by RAMS between January 2019 and September 2023, scrutinising whether staff at the home lender used un­accredited loan ­referrers and gave misleading information.

ASIC’s searches show the regulator is working closely with Austrac, which has previously taken aim at Westpac over money-­laundering failures, handing the bank a $1.3bn fine in 2020, the largest fine for a bank in Australia.

Westpac’s former head of risk and treasury audit Samantha Aitken alleged in her court claim against the bank that she had tried to alert the bank to “suspected fraud and other criminal activities” at a RAMS franchisee in Fairfield, in western Sydney.

In responding to her case, Westpac has sought several exemptions from Austrac to disclose “suspicious matter material”, with the bank’s lawyers warning that the bank risked tipping off criminals that they were under surveillance.

Raymond the Ram aka Alex Jacques with Bunty Gebbett of RAMS Home Loans at the Toowoomba Autumn Home Show in 2011. Photo Kevin Farmer / The Chronicle

ASIC senior lawyer Deborah Mitchell said the six documents identified by the regulator, if released, “could reasonably be expected to alert parties to lines of enquiry pursued by ASIC”, noting “it is significant that the investi­gations are continuing”.

“The risk of potential prejudice if disclosure is made prior to the conclusion of the investigations is real,” she said.

An ASIC spokesman said the commission “regularly engages with fellow regulators on a wide range of matters”.

An Austrac spokeswoman noted the agency was “aware of matters involving RAMS”.

“In line with normal processes, Austrac monitors and receives information about the changed circumstances of reporting entities and uses this information in its regulatory functions,” she said.

Westpac acquired RAMS in 2007 in a $140m deal, saving the home lender from the depths of the global financial crisis.

Westpac sought to sell RAMS, after shopping around the network of almost 40 franchisees who over their final years sold only Westpac products, before deciding last August to shut down the ­company and run-off its loan book.

Only $30bn in RAMS loans are left in the system after diving 17 per cent over the last financial year, as customers left the lender.

Accounts filed with the regulator reveal RAMS slipped to an $18.6m loss for the 12 months to September 2024, wiping out a $19.7m profit made the year prior

A Westpac spokesman said the bank had taken “appropriate action in 2022” against RAMS after “our risk management controls uncovered issues in some RAMS loan applications”.

“This action included heightened monitoring of loan applications, investigations into fran­chisees and the self-reporting of issues to regulators,” he said.

“From November 2022 onwards, a number of franchise agreements were terminated and RAMS has now been closed to new applications.”

Originally published as ASIC and Austrac close in on Westpac’s RAMS home loans