👉 Background: RAMS (which stands for Registered Australian Mortgage Securities) Home loans is a home loan lender that started back in 1991, and was acquired by Westpac in 2007 for $140 million. Last year, Westpac closed RAMS to new business after it found out about some serious misconduct going on.

👉 What happened: If that wasn’t bad enough, ASIC is now suing RAMS for systemic misconduct between 2019 and 2023. In particular, the case is focused on staff who fudged customer financial data to get customer loans across the line - we’re talking fake payslips or unexplained changes to customer income and expenses. The crazy part is that some customers didn’t even know that the staff were doing this.

👉 What else: RAMS / Westpac has admitted liability and already forked out around $7.5 million to affected customers. But, there’s more to come from ASIC… and this ain’t the first time liar loans have been a problem in the housing market.

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What's the key learning?

💡Liar loans are home loans approved using false financial information. It could be made-up payslips, false job titles or magically disappearing expenses.

💡While sometimes these false information is provided by borrowers, in this case, ASIC alleges that the RAMS staff were the ones who submitted fake documents to help borrowers qualify for loans.

💡Interestingly, Westpac was caught breaching the lending laws itself back in 2018. That was when it approved over 10,000 home loans to borrowers who may not have been able to afford them. And while that case was settled, Westpac could face a maximum fine of more than $100 million for RAMS breaches.