RAMS Financial Group has agreed to pay $29.62 million to settle a Federal Court class action brought by 15 former franchisees who alleged the Westpac-owned lender wrongfully terminated their agreements and withheld trail commissions.
Justice Michael Lee made orders in the Federal Court in Sydney on 18 September, recording the proposed settlement deed, with a final approval hearing listed for 19 October.
Under the deed, RAMS would pay a total of $29,624,397.67, comprising $7,783,183.14, including GST for 25% trail commission withheld from the affected franchisees after their agreements were terminated; $1,042,234.01 in interest; and a further $20,798,980.52. The 15 group members will share the settlement sum, subject to the court approving the proposed resolution.
The court also ordered RAMS to offer the group members a buyout of their future trail commission entitlements within five business days of the court making settlement-approval orders. The class action was funded by Australian-owned litigation funding firm Court House Capital. RAMS has not admitted liability or wrongdoing as part of the proposed settlement.
The franchisees filed their claim in May 2024, alleging RAMS had unjustly terminated roughly 20 franchise agreements – about a third of its network – after the lender said it had identified "anomalies" in loan documents submitted by franchisees on behalf of customers. Westpac told The Adviser at the time that it had "exited a number of franchisees that did not meet required standards under their contractual arrangements" following a review.
The former franchisees alleged RAMS had breached contractual and statutory duties of good faith by ending their franchise agreements without proper cause, and challenged its decision to withhold 25% of their trail commissions, saying the lender's regulatory review unfairly affected businesses that had complied with its requirements. A spokesman for the franchisees told AAP in June 2026 that Westpac had "improperly terminated viable businesses."
The dispute follows a separate, larger regulatory action against RAMS. In Australian Securities and Investments Commission v RAMS Financial Group Pty Ltd (Penalty) [2025] FCA 1304, the Federal Court ordered RAMS to pay a $20 million penalty after the company admitted widespread compliance failures in arranging home loans between June 2019 and April 2023, including dealing with unlicensed referrers and inadequate supervision of representatives. Justice Yaseen Shariff found RAMS had failed to ensure its credit activities were "efficiently, honestly and fairly" conducted, and noted the court also heard that franchise staff had submitted false payslips from non-existent employers and altered customer information to support loan approvals.
A related, unresolved proceeding brought by Sech Finance and Daniel Lubarda remains before Justice Lee. Legal publication Lawyerly reported in 2025 that a separate RAMS franchisee had objected to a joint trial of its case alongside a related class action, arguing the overlap between the matters "may be much less than advertised."
Westpac completed the sale of its RAMS residential mortgage portfolio on 3 August to a consortium comprising Pepper Money, credit funds and accounts managed by KKR, and PIMCO-managed funds, transferring a $15.4 billion portfolio of mortgages. The deal capped a process that began with a binding agreement struck in early November 2025, when the portfolio was valued at $21.4 billion before its size ran down through ordinary loan amortisation. Westpac had already stopped accepting new lending through the RAMS franchise network in August 2024 amid regulatory scrutiny of its credit controls.
The settlement's approval hearing on 19 October will determine whether the deed becomes final, closing out one of two remaining franchisee actions tied to RAMS' wind-down.
