A GOVERNMENT-BACKED inquiry into Australia’s finance sector yesterday said it will start its year-long investigation by scrutinizing the selling tactics of banks’ most lucrative products — mortgages.

The Royal Commission inquiry heard on its opening day that almost half of the over 385 public submissions it had received were about banks, reflecting the erosion of public trust in a sector that has been rocked by scandals including interest rate rigging and alleged money laundering.

Its final recommendations could lead to criminal or civil prosecutions as well as greater regulation, just as the banks are dealing with a revenue crunch following years of record profits.

Mortgages are Australian banks’ most lucrative money-spinners. The four major lenders — Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking Group, National Australia Bank and Westpac Banking Corp. — hold about 80 percent of the country’s mortgage market.

“The commission will hear evidence of events involving certain financial services entities in the context of home lending that suggest that consumers have not always enjoyed the right to be treated honestly and fairly when it comes to home loans,” Rowena Orr, a barrister who is assisting the commission, said at the start of the inquiry in Melbourne.

“Some of these events may have involved breaches of the law while others may have involved departures from community standards and expectations.”

The Royal Commission has the power to compel witnesses, recommend criminal charges and propose legislative changes. While Australia’s finance sector has been subjected to numerous probes in the past, it is the first time the whole industry has faced such scrutiny.

After years of refusing to order such a far-reaching inquiry, the centre-right federal government relented to public pressure late last year in the wake of money-laundering allegations against CBA.

The banks also gave up on campaigns to avoid an inquiry and published a joint letter in November saying that it was now in the national interest to have one.

The commission also will examine the scandal-hit wealth management and financial advice industries. (SD-Agencies)