Westpac rallies despite RAMS Financial faces misconduct charges
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More news: Westpac led gains among the big banks in afternoon trading, even after the securities regulator opened civil penalty proceedings against the lender's subsidiary RAMS Financial Group for alleged systematic misconduct.
Westpac shares were up 2% to $33.25 at 2:50pm AEST, taking the bank's 12-month return to 24.3%.
Its big four rivals Commonwealth Bank (1.1%), ANZ (0.9%) and National Australia Bank (0.8%) also advanced.
ASIC sues Westpac's RAMS Financial for 'systematic misconduct'
The news: The Australian Securities and Investments Commission (ASIC) has sued Westpac's mortgage broking franchise RAMS Financial Group for systematic misconduct in arranging home loans.
The context: ASIC alleged RAMS breached its obligations as an Australian Credit Licensee and engaged in widespread unlicensed conduct between June 2019 and April 2023.
RAMS, a wholly owned subsidiary of Westpac, has admitted to conducting business with unlicensed persons, failing to supervise its representatives properly, and failing to have adequate policies and procedures in place.
ASIC has commenced civil penalty proceedings in the Federal Court and is seeking declarations and pecuniary penalties.
In a release to the ASX, Westpac said RAMS will continue to work with ASIC to resolve the proceedings as quickly as possible. Westpac said provisions should be sufficient to meet the financial outcome of the proceedings.
Westpac, which bought RAMS in 2008, closed the business to new home loan applications on 6 August last year.
What they 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," said ASIC deputy chair Sarah Court.
"RAMS franchise staff were found to have submitted false pay slips from non-existent employers and altered customers’ liabilities and expenses to enable them to meet serviceability requirements to get the loan application over the line, while in another example a RAMS franchise employee was found to be involved in manufacturing a fake contract of sale for a home."
The sources: ASIC media release, ASX
