Founding chairman of the Australian Competition and Consumer Commission (ACCC), Professor Allan Fels, has slammed the corporate regulator for being weak and ineffective in fighting bank misconduct.
Professor Fels also said the Australian Securities and Investments Commission (ASIC) should be stripped of its supervisory powers over the banks.
Instead, he wants those powers handed to the ACCC — a move that would send a chill through banking boardrooms, which he said have become too cosy with ASIC.
"ASIC is not feared, unlike the ACCC," Professor Fels told ABC's AM program.
"[The ACCC] had a long-running culture of without fear or favour law enforcement."
Professor Fels said the ACCC takeover of ASIC bank supervisory powers was seriously considered in the late 1990s as part of the Wallis Inquiry into the financial system when he was the high profile competition czar.
"But fierce lobbying by the financial services sector meant that the ACCC did not get given the coverage.
"Even at that point, it was obvious that ASIC was not up to the job and nothing has changed.
"It's not just me. The ACCC is a very serious organisation. It's been around for a long time with an unequivocal commitment to law enforcement."
However, it appears the ACCC is no longer interested in such an expanded role.
"We began our market study into financial services last year by establishing a permanent team dedicated to competition issues in financial services," said a spokesman for the competition regulator.
"We're comfortable with the role that we have recently been given."
'Not sure we can rely on the market to deliver the result'
Professor Fel's push for an ACCC takeover of ASIC's bank supervisory powers comes amid more damning evidence from the financial services royal commission about unlawful and unethical practices in the banking sector.
Royal Commissioner Kenneth Hayne suggested yesterday that the National Australia Bank may have engaged in criminal conduct by charging $3 million in fees to dead people.
In addition to stripping ASIC of its bank oversight powers, Professor Fels has backed a proposal from the Greens to break up the big banks and wealth manager AMP.
While some banks like the Commonwealth Bank and ANZ have already moved to sell off their wealth management arms to "get back to basics", Professor Fels is sceptical.
"I'm not sure that we can rely at this point on the market to deliver the result we want."
Professor Fels said he has been shocked at the stream of revelations about banking misconduct that have emerged from the royal commission.
"I have been shocked. The royal commission has dug quite deep and found deep-seeded unethical and and possibly illegal behaviour and that has shocked the whole community."
ASIC has declined to comment.Follow Peter Ryan on Twitter @peter_f_ryan.This article was first published by http://www.abc.net.au/Author: Peter Ryan - Senior Business Correspondent