SYDNEY — Australia opened a long-awaited inquiry into its massively-profitable finance industry on Monday after a string of scandals rocked confidence in the sector.

The country’s “big four” banks — among the developed world’s wealthiest — have been under increasing scrutiny in recent years amid allegations of dodgy financial and life insurance advice, and mortgage fraud.

There have also been claims of anti-money laundering laws being breached and benchmark interest rates rigged.

Prime Minister Malcolm Turnbull had long resisted Labor opposition calls for a royal commission into misconduct, claiming it would be a waste of money, but mounting political pressure forced his hand.

With uncertainty over the issue hurting offshore investor confidence, he announced the inquiry late last year to probe “the nation’s banks, big and small, wealth managers, superannuation providers, insurance companies”.

Australian Bankers’ Association head Anna Bligh said the hearings may be uncomfortable.

“It’s important that it (the inquiry) gets to the matters that have disturbed the public,” she told ABC radio.

“I do expect this will be painful for banks and their staff.”

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has the power to summon witnesses and take evidence.

While it can authorize police to apply for search warrants and witnesses who fail to appear may be arrested, it is not able to order compensation to those affected by any wrongdoings.

It can, however, make recommendations for the government to consider, such as changing regulations governing the sector.

Commissioner Kenneth Hayne, a former High Court judge, has 12 months to conduct his investigation and lodge a report with Canberra. — AFP