SYDNEY (Reuters) - Australia’s top banks routinely and repeatedly breached laws when issuing home loans, credit cards and other consumer loans, according to a scathing summary of the first round of hearings at the country’s inquiry into financial misconduct.

Rowena Orr, barrister assisting the judicial inquiry, said on Friday the misconduct found in subpoenaed confidential records and through public examination of bank executives included several instances of breaches of the Corporations Act and the National Credit Act.

“Over the last two weeks the commission has received evidence of misconduct and conduct falling below community standards and expectations by a number of financial services entities,” Orr told the inquiry.

Some of the examples included: selling insurance to thousands of people who could not claim it; offering bonuses and incentives that encouraged bankers to engage in fraudulent lending practices; and giving car yards higher commissions for selling higher-rate auto loans.

In summary, the inquiry found that the banks failed to act honestly and fairly, as required by law and breached their obligations to lend responsibly.

The banks have the opportunity to respond to the Royal Commission, as the year-long inquiry is called, which is due to publish an interim report by September.

Its final recommendations could lead to criminal or civil prosecutions as well as greater regulation on the financial sector, which includes the ‘Big Four’ lenders - National Australia Bank, Commonwealth Bank of Australia, Australia and New Zealand Banking Group and Westpac Banking Corp.

The interim summary was focused on instances of misconduct by the consumer credit units of several major financial institutions including ANZ, CBA, NAB and Westpac.

The center-right government reluctantly agreed to order the inquiry last year in response to a series of banking scandals, including interest-rate rigging and breaches of anti-money laundering laws by CBA.

FALSIFIED DOCUMENTS

Earlier in the day, Westpac disclosed to the inquiry 55 new instances where staff falsified or accepted falsified documentation linked to home loan applications over the past few years.

The inquiry also heard on Friday that Westpac offered credit card limit increases to more than two million potentially vulnerable people without making minimum checks about whether they had a job and could afford to repay the debt.

As a result, the bank derived A$23 million ($17.74 million) in profits but thousands of people were left in financial difficulty, the inquiry revealed.

The Australian Securities and Investments Commision (ASIC) raised Westpac’s lending practices with the banking industry lobby group as early as 2012, but the bank ignored the regulator’s concerns and its threats of legal action.

“Of the big four banks, Westpac appears most resistant to ASIC and the laws we administer,” according to a 2015 ASIC memo about a meeting it held with Westpac Chairman Lindsay Maxsted, which was disclosed in the inquiry.

The inquiry will reconvene in April to assess the scandal-hit financial advice and wealth management sectors.

($1 = 1.2967 Australian dollars)