Red Card! Home Loan Provider Penalised $20 Million in Federal Court
On 24 October 2025, the Federal Court of Australia (FCA) ordered RAMS Financial Group Pty Ltd (RAMS) to pay a $20 million penalty for widespread compliance failures in relation to arranging home loans.
RAMS was a franchisor of independent franchisees. It was required to be licensed to operate its business under the National Consumer Credit Protection Act 2009 (Cth) (NCCP) and held an Australian Credit License (License).
In 2008, Westpac acquired RAMS. RAMS franchisees used the RAMS business name to provide credit assistance to consumers, but these were in fact home loans with Westpac.
RAMS operated a franchise model through a franchise network. The franchisees operated under individual franchise agreements and employed their own staff.
On 6 August 2024, Westpac announced that it would close RAMS and all franchisee offices and absorb the existing home loans into Westpac.
On 4 June 2025, ASIC initiated legal proceedings alleging that RAMS:
failed to implement adequate procedures to ensure that its independent franchisees complied with the NCCP;
failed to adequately supervise its franchise network; and
permitted its franchisees to submit fraudulent pay slips from fake employers, alter customer’s liabilities and expenses to allow them to meet serviceability requirements.
$20 Million Breach
The FCA found that RAMS breached the NCPP by:
dealing with unlicensed referrers;
failing to provide adequate protections to ensure that customers were not disadvantaged by any conflicts of interest;
failing to supervise RAMS representative to ensure compliance with the NCPP; and
failing to do all things necessary to ensure that its franchisees were engaged efficiently, honestly and fairly.
What does this mean for franchisors?
Franchisors are incentivised to ensure that their franchisees are acting lawfully as non-compliance or unlawful conduct will adversely affect the franchise brand. However generally, contraventions of law by franchisees does not usually create direct liability for the franchisor.
There is no legal obligation to hold a franchisor directly accountable for failing to:
implement policies or best practice standards within the franchise network;
supervise its franchisees; or
monitor compliance.
RAMS was only held liable as it was required to hold and operate under a license. As such, liability was imposed on RAMS.
What does this mean for customers?
On one hand, franchisors being subject to a licencing regime, in theory, provides a greater degree of certainty for the public dealing with a licensed entity. Theoretically, it confirms standards and adequate supervision is required by the franchisor.
However, RAMS v ASIC demonstrates that even a licensed business may not meet the standards and supervision levels required by the NCPP. Therefore, the requirement for businesses to hold a license provides an opportunity for recovery by a regulator after an event. It is unlikely to create an adequate safeguard for everyday consumers.
For more information, please contact:
Alasdair Woodford
Principal
T: 03 5225 5217 | M: 0436 456 144
E: awoodford@ha.legal
Joseph Flanagan
Senior Associate
T: 03 5226 8504 | M: 0491 307 550
E: jflanagan@ha.legal
Tayla Berger
Senior Associate
T: 03 5226 8559 | M: 0407 825 365
E: tberger@ha.legal
Jemimah Fitzgerald
Lawyer
T: 03 5225 5219
E: jfitzgerald@ha.legal
Prepared with the assistance of Pippa Duniam.
