Australia's banking watchdog rejects blame for lenders' misconduct

[SYDNEY] Australia's prudential watchdog rejected on Wednesday criticism it was too soft in regulating the country's beleaguered banking industry, saying it is mandated to focus on material risks to banks' stability and not on their treatment of customers.

Australia's biggest banks are in damage-control mode after a powerful inquiry, called a Royal Commission, uncovered a culture of greed and widespread misconduct in the industry.

The Commission's interim report last month reserved special criticism for regulators that failed to pick up or punish problems ranging from billing fees to the dead to aggressive loan selling.