(Reuters) – Australia’s Westpac said on Wednesday that its unit, RAMS Financial Group, had reached an agreement with the country’s securities regulator to resolve an investigation concerning the oversight of conduct of its franchisees and their employees.
The unit will resolve the matter through agreed civil penalty proceedings filed by the Australian Securities and Investments Commission (ASIC) in the Federal Court, based on allegations of systemic misconduct in arranging home loans.
The ASIC has commenced proceedings against the lender’s unit, alleging that it engaged in widespread unlicensed conduct between June 2019 and April 2023.
Allowing unlawful conduct to occur, RAMS created the opportunity for loans to be provided to customers who otherwise may not have qualified for those loans, and thereby increased commissions earned by the franchisees, ASIC Deputy Chair Sarah Court said.
RAMS has admitted to conducting business with unlicensed persons, failing to properly supervise its representatives, and other related shortcomings, the regulator said in a statement.
In August 2024, Westpac immediately shut down RAMS to new home loans, while continuing to retain the ongoing loans under the unit.
The decision to close followed a strategic review by the parent company that had considered selling the business, as well as an evaluation ordered by ASIC of RAMS and its franchisees.
Westpac expects that existing provisions should be sufficient to meet the financial outcome of the proceedings, subject to court approval.
ASIC is seeking declarations and financial penalties against RAMS.
The date of the first hearing is yet to be scheduled.
(Reporting by Sneha Kumar in Bengaluru; Editing by Mohammed Safi Shamsi)