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A major bank has closed the doors on its subsidiary business following a “strategic review”.
Announced on the ASX on Tuesday (6 August), Westpac has confirmed that it will “further simplify” its business by closing RAMS Financial Group Pty Limited (RAMS) to new home loan applications from today.
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The review was first announced on 6 November 2023.
The major bank confirmed that existing RAMS customers’ loans will remain in place, and customers will still be able to access service through the RAMS app, website and call centre.
Additionally, Westpac has informed that it will also be contacting customers to assist them with current RAMS mortgage applications.
Furthermore, Westpac is set to retain the RAMS mortgage portfolio of loans – which stood at $31.8 billion as of 30 June 2024 – and stated that the close to new RAMS home loan applications would “not have a material impact” on the major bank’s financial results for the year ending 30 September 2024.
Commenting on the closure, Westpac managing director mortgage, Damien MacRae, said: “We have delivered considerable portfolio simplification over recent years, and after a thorough review, we have decided that offering home loans through RAMS franchisees is not right for Westpac.”
“We will help our customers, franchisees, and our people through this process.
“We are also providing franchisees with mutually agreed support and there will be ongoing opportunities for RAMS employees within Westpac,” MacRae said.
RAMS became a single-brand mortgage lender that only offered RAMS products and services on 1 December 2020, with the shift in business model occurring ahead of the implementation of the best interests duty on 1 January 2021.
Franchisees launch lawsuit against RAMS
RAMS’s closure comes as a major court action was lodged in late May this year against RAMS by former franchisees who alleged that the group unjustly terminated their contracts.
The class action – filed by Morris Mennilli Lawyers on behalf of certain former RAMS franchisees – has come about after RAMS allegedly terminated the authorised credit representative agreements and franchise agreements held by around 20 franchisees last year. This is believed to be about a third of the entire network size.
RAMS confirmed to 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 by Westpac and RAMS Financial Group.
The lender confirmed that “disputes” had been raised by franchisees in relation to this action.
[RELATED: RAMS franchisees launch class action]
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