Westpac Shuts Down RAMS Financial, Halts New Home Loan Applications

Westpac has permanently wound up the operations of its loan render subsidiary, RAMS Financial, after unsuccessfully trying to sell it.

RAMS will no longer entertain new home loan applications -- a move aimed at simplifying the bank's portfolio. Westpac, however, said RAMS' existing customers will remain unaffected and that they can access service through the RAMS app, website, and call center, reported Capital Brief.

"We have delivered considerable portfolio simplification over recent years and after a thorough review, have decided that offering home loans through RAMS franchisees is not right for Westpac," Damien MacRae, Westpac's managing director for mortgages, said, as per Courier Mail.

"We are also providing franchisees with mutually agreed support and there will be ongoing opportunities for RAMS employees within Westpac," MacRae said.

Westpac's attempt to sell RAMS bore no fruit due to disinterest from the potential buyers. The reason for the lack of interest could have been related to an ongoing investigation by the Australian Securities and Investments Commission (ASIC) into RAMS' business practices.

The investigation began following speculations that home loans made by RAMS franchisees may have violated credit rules. Now, ASIC is trying to unearth evidence of whether RAMS franchisees made home loans to borrowers, who may not have been able to afford them, or whether they failed to follow proper lending procedures.

This has led to disgruntled RAMS franchisees launching a class-action lawsuit.

Established in 1991, RAMS has emerged as a prominent non-bank provider of home loans in Australia. With the AU$140 million purchase in 2008, Westpac increased its market share in the mortgage industry.