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SYDNEY, June 15 (Reuters) - The Australian Senate voted on Thursday to hold a parliamentary inquiry into the banking sector, which could pressure the government to ramp up regulation of an industry facing a backlash after a series of scandals.
Under the "Banking and Financial Services Commission of Inquiry Bill 2017", introduced by a group of non-government cross-bench senators, banks would be forced to testify before a powerful parliamentary inquiry.
Bank bosses currently face questioning by the lower house of parliament at least once a year.
For a more powerful inquiry to become a reality, the Senate bill must now be passed by the lower house where the government holds a slim majority and says financial and consumer watchdogs already have enough authority over lenders.
Greens Senator Peter Whish-Wilson said the Senate's support for the bill gives Prime Minister Malcolm Turnbull the choice to start "his own royal commission or he runs the risk that parliament does it without him".
Turnbull has previously ruled out holding a bank royal commission, the most powerful inquiry in Australia.
Australia's four major lenders - Commonwealth Bank of Australia, Westpac Banking Corp, ANZ Banking Group and National Australia Bank - have come under fire after scams involving misleading financial advice, insurance fraud and interest-rate rigging, as well as for hiking mortgage rates independently to the central bank.
The left-wing Greens party, which co-sponsored the bill, said it hopes rural government lower house member George Christensen will break from his party and support the bill, given his history of criticising banks.
A spokeswoman for Christensen told Reuters the lawmaker would "stay true" to previous public support for the bill, provided that the inquiry includes Australia's insurance and pension industries.
Reporting by Byron Kaye and Colin Packham; Editing by Michael Perry