Crown chair Helen Coonan is chair of PR firm GRACosway, whose clients have been involved in questionable financial transactions and include mortgage brokers fighting commission bans. Her PR role is in conflict with her position as chair of financial complaints ombudsman AFCA, and both make her position at the head of Crown unsustainable.
It was a key recommendation of the Hayne royal commission into misconduct into the banking and financial sector โ a ban on trailing fees, where banks provide mortgage brokers an ongoing fee for the life of the consumerโs loan.
The ban was to come into effect from this year but following intense lobbying from the well-connected mortgage broking lobby, the Coalition announced a backdown. Instead, the government will review trailing commissions in 2022.
Critics say the capitulation has left consumers in a worse state. This is because asย The New Dailyย reports, the overwhelming evidence is that โloans arranged by brokers tend to be larger, take longer to pay down and cost more than loans arranged directly with banks or other providersโ.
โWith the bank paying the commission, the incentive is for the broker to direct their clients to the bank with the highest commission.
And because the commission is a percentage of the size of the loan, there is also an incentive to encourage clients to borrow as much as possible.โ
A 2017 study of the home loan industry by investment bank UBS foundย up to a third of mortgages are โliar loansโย โ based on inaccurate information that may have been massaged to help the borrower get a bigger loan than they should have been eligible for. According to UBS, loans arranged throughย brokers had a higher rate of misrepresentation.
And who represents the well-connected mortgage broking industryย the Mortgage and Finance Association of Australia?
Step forward one of the largest lobbying firms in the country, GRA Cosway,ย chaired by Helen Coonan, the very same chair of the Australian Financial Complaints Authority who put banks on notice regarding their โarrogant indifference to regulatory and compliance riskโ and โpoor cultureโ.
Moreover, GRA Coswayโsย client listย includes a number of financial companies, a number of which are also members of AFCA.
There is AHL Investments, better known as Aussie Home Loans, which also offers personal loans.
Then there is PayPal Australia.ย The fintech group was theย 10th most-complainedย about company to AFCA in the eight months to June 30, 2019, according to publicly released data, with 833 complaints and a 58.3 per cent referral resolution rate.
Then there isย Plenti, formerly called Ratesetter, which provides personal loans; and the small business lender Moula Money Pty Ltd.
What an extraordinary number of conflicts of interest Coonan has to manage.
As noted in an earlier article, in her chair role at Crown, she is a director of a company that directly benefits from making sure clients continue to have easy access to credit but also chairs the very organisation that rules on whether financial institutions are behaving irresponsibly in handing out credit.
Other financial-related companies represented by GRA Cosway include the litigation funderย Omni Bridgewayย and Sportsbet, and once included the financiers behind the collapse of Dick Smith.
While individual disputes obviously are not brought to the AFCA board, the role of chair is meant to be completely independent, especially when all the other directors come from industry and consumer backgrounds/experiences. Given the range of conflicts Coonan must manage in her role of chair of so many organisations with diametrically opposed interests, โcomplete independenceโ is not a description that could be applied to her as AFCA chair.
Coonan said thousands of consumers had felt โbadly let downโ by financial institutions as far back as the global financial crisis and that โblack-letter lawโ arguments would not succeed if they delivered fundamentally unfair outcomes for consumers.
The public would probably feel โbadly let downโ by Coonan, and would also not be interested in โblack-letter lawโ arguments about Chinese walls, for example.
With theย Australian Financial Reviewย having called for Coonanโs resignation of AFCA, time will tell if she hears the message and realises her time is up as chairwoman of so many boards.