Deductions leave group members with about 44 percent of the payout
The Federal Court has approved a $12 million funder’s commission in a RAMS franchisee class action, ruling that hindsight should not shrink the funder’s reward.
In Top Ryde Financial Services Pty Ltd v RAMS Financial Group Pty Limited (Settlement Approval) [2026] FCA 1652, handed down on 30 October 2026, the court approved the settlement and about $16.6 million in deductions.
The proceeding, covering 15 RAMS franchise businesses, challenged RAMS Financial Group’s (RFG) conduct in connection with heightened scrutiny of loan applications, including its decisions to revoke authorised credit representative arrangements and terminate franchises. The parties settled after exchanging written closing submissions at a trial that ran alongside a related case concerning the Fairfield franchise. In that case, the court found a confined breach of RFG’s obligation of good faith and assessed the franchisee’s lost opportunity at 12.5 percent.
The settlement sum of about $29.6 million included withheld trail commission with interest and an additional amount of about $20.8 million. RFG also agreed to stop withholding part of future trail commission and offer buy-outs of future trailer income.
Deductions left group members with about 44 percent of that sum. The court acknowledged that the commission exceeded the average percentage in some recent approvals.
But it said that funders strike their bargain while the outcome remained uncertain, adding that “the price of the voyage is struck before the voyage is undertaken.” It described the case as “quite high-risk litigation.” The funder paid $4 million in legal fees and disbursements and kept its capital exposed through trial.
Under the funding agreements’ alternative formulas, the funder’s commission would have been $8.58 million or $16 million. The $12 million sought equalled three times its $4 million outlay. All but one franchisee had signed funding agreements, and no group member objected.
“A headline percentage may conceal more than it reveals,” the court said.
The court did, however, limit the settlement deed’s reach. The deed sought to require group members who were not parties to it to give covenants, including promises concerning public statements and the destruction of documents. The court held that a representative applicant’s capacity to settle the case “is not authority to make separate contractual promises on behalf of every group member.” Silence, it added, did not establish agreement. Its orders imposed none of those obligations on non-party group members unless they agreed.
The court ordered that all group members share the deductions pro rata, so unfunded members would not benefit from expenditure and risk borne for the whole class without bearing their share.
It also gave one franchise’s principal until 6 November 2026 to dispute a late revision cutting the franchise’s share from about 20 percent to about 17 percent.
