CANBERRA, Australia (AP) — The Australian government bowed to growing pressure on Thursday by announcing a high-level inquiry into misbehavior in Australia's financial sector.
A royal commission — the highest form of investigation in Australia — will review the banking, pension and financial services industries, Prime Minister Malcolm Turnbull announced.
Turnbull's conservative coalition has been resisting the center-left opposition Labor Party's calls for such an inquiry for almost two years.
But the turning point came when the chief executives of Australia's four largest banks wrote to the government on Thursday requesting a "properly constituted inquiry," because uncertainty was "hurting confidence."
If the government had not established a royal commission, some government lawmakers threatened to support a Labor bid to have Parliament conduct its own inquiry into allegations of misconduct.
"Ongoing speculation and fear-mongering about a banking inquiry or royal commission is disruptive and risks undermining the reputation of Australia's world-class financial system," Turnbull said in a statement.
"The government has decided to establish this royal commission to further ensure our financial system is working efficiently and effectively," he added.
The inquiry was welcomed by Jeff Morris, a financial planner who in 2013 exposed a culture of corruption and cover-up in the Commonwealth Bank of Australia, the nation's largest bank, that targeted vulnerable customers.
Morris accused the government of "running a protection racket for the banks" by rejecting a recommendation for a royal commission by a previous parliamentary inquiry into the Commonwealth Bank.
Government lawmaker George Christensen said many of his constituents had complained of banks' dishonest behavior.
"There has been quite clearly unethical action from the evidence that I have seen, ... fraudulent and perhaps even criminal action," Christensen said. "This is systemic."
Turnbull said the royal commission "will not put capitalism on trial" and should not run forever, "costing many hundreds of millions of dollars."
Law firm Maurice Blackburn Lawyers said the royal commission must be wide-ranging to end scandals and to bring about substantial reform.
The firm's principal Josh Mennen said systemic financial scandals were rife as a result of a deeply ingrained culture that has financially ruined thousands of Australians.