iscover 
The former Westpac subsidiary has agreed to settle the class action in the Federal Court, with the proposed settlement to return to the court for final approval on 19 October.
The proposed settlement would resolve claims brought by the former franchisees over the termination of their franchise agreements and RAMS’ decision to withhold 25 per cent of their trail commissions following termination.
RAMS has not admitted liability or wrongdoing as part of the settlement.
Terminations and trail
The former franchisees alleged RAMS breached contractual and statutory duties of good faith by terminating their franchise agreements without proper cause.
They also challenged RAMS’ decision to withhold 25 per cent of their trail commissions after their agreements were terminated, saying the lender’s regulatory review unfairly affected businesses that had complied with its requirements.
Settlement terms
Under the proposed settlement deed, RAMS will pay a total of $29,624,397.67.
This includes $7,783,183.14, including GST, in relation to the 25 per cent of trail commissions withheld from affected franchisees following termination, $1,042,234.01 in interest and a further $20,798,980.52.
The 15 group members will share the settlement amount.
The court has also ordered RAMS to offer the group members a buyout of their future trail commission entitlements within five business days of the settlement-approval orders being made.
The class action was funded by Court House Capital, which is seeking a $12 million funder’s commission in addition to legal costs, subject to court approval. Any approved commission and legal costs would be deducted from the settlement amount.
RAMS compliance crackdown
The class action was brought against the backdrop of RAMS’ compliance crackdown and subsequent withdrawal from new lending.
Separately to the franchisees’ allegations, RAMS faced civil penalty proceedings brought by ASIC in June 2025 over its home-loan operations.
In October 2025, the Federal Court ordered RAMS to pay a $20 million penalty after the company admitted compliance failures between June 2019 and April 2023.
ASIC alleged those failures included dealings with unlicensed referrers, deficient conflict-of-interest arrangements, and inadequate supervision of representatives. The court also considered instances in which franchise staff submitted false payslips from non-existent employers or altered customer information to support loan approvals.
Westpac announced in August 2024 that it would close RAMS. The bank subsequently entered into an agreement to sell the RAMS residential mortgage portfolio in November 2025.
The sale was completed in August 2026, with the portfolio sold to a consortium comprising Pepper Money, credit funds and accounts managed by KKR, and PIMCO-managed funds.
The portfolio was worth around $15.4 billion at completion, down from $21.4 billion when Westpac signed the binding agreement in November 2025, as loans continued to run off through repayments.
Broker Daily has reached out to a legal representative of the franchisees for comment, while sister brand The Adviser has reached out to Westpac.
[Related: Lender pays $19,800 over ‘no credit check loans’ claim]
Want to see more stories from trusted news sources?Make Broker Daily a preferred news source on Google.
