Treasurer Josh Frydenberg has delivered a scathing rebuke to financial institutions for their "greed"-driven misconduct — and the banking regulator for not doing enough to punish poor behaviour.

Frydenberg was speaking today at a press conference in Melbourne to release the banking royal commission's interim report canvassing shocking revelations about misconduct in the financial sector unearthed over four months.

The interim report covers the first four rounds of hearings focusing on consumer lending, financial advice, loans to small and medium businesses, and banking conduct in regional and remote communities.

"The interim report delivered today to the Governor-General shines a very bright light on the poor behaviour of our financial sector," Frydenberg said.


"Banks and other financial institutions have put profits before people, greed has been the motive as short-term profits have been pursued at the expense of basic standards of honesty. Too often simply selling products has become the sole focus of attention."

Frydenberg said the culture and conduct was reflected in the banks' remuneration practices, with "almost every piece" of misconduct identified in the report "connected directly to some monetary benefit".

He said the report made it clear that, while behaviour was poor, "misconduct either went unpunished or the consequences did not meet the seriousness of what has been done".

In his report, Commissioner Kenneth Hayne, QC, said the Australian Securities and Investments Commission "rarely went to court to seek public denunciation of and punishment for misconduct" while the Australian Prudential Regulation Authority "never went to court".

"Much more often than not, when misconduct was revealed, little happened beyond apology from the entity, a drawn-out remediation program and protracted negotiation with ASIC of a media release, an infringement notice, or an enforceable undertaking that acknowledged no more than that ASIC had reasonable 'concerns' about the entity's conduct," Hayne said.

"Infringement notices imposed penalties that were immaterial for the large banks. Enforceable undertakings might require a 'community benefit payment', but the amount was far less than the penalty that ASIC could properly have asked a court to impose."

Hayne said "too often, entities have been treated in ways that would allow them to think that they, not ASIC, not the parliament, not the courts, will decide when and how the law will be obeyed or the consequence of the breach remedied".

Frydenberg said this was "clearly unacceptable and cannot continue".


The report also raised the question of whether existing laws should be administered or enforced differently, and whether new laws should be introduced or the system should be simplified.

"The law already requires entities to 'do all things necessary to ensure' that the services they are licensed to provide are provided 'efficiently, honestly and fairly'," Hayne said.

"Much more often than not, the conduct now condemned was contrary to law. Passing some new law to say, again, 'Do not do that', would add an extra layer of legal complexity to an already complex regulatory regime. What would that gain?"

Frydenberg said the report did not include specific recommendations or referrals to appropriate agencies for enforcement.

"This interim report is a frank and scathing assessment of the culture, conduct and compliance of our financial system," he said. "Australians expect and deserve better."

It comes after Prime Minister Scott Morrison denied the inquiry had been too short, saying Hayne had not asked for an extension. "If he asked for an extension then he will get one," Morrison told reporters in Sydney today.

"I think that the royal commission has been very vigorous in looking at the details of all of these quite heartbreaking cases for many Australians and being given them the weight that is necessary."

Out of nearly 9400 submissions, only 27 victims have given evidence so far. Not covered in the interim report were superannuation and insurance, canvassed in the fifth and sixth rounds of hearings.

The seventh round, focusing on public policy questions arising from the revelations, will begin on November 19 in Sydney.

Labor wants the royal commission extended so thousands more victims can tell their personal stories. Labor spokeswoman Clare O'Neil says the commission needs time to visit regional areas.

To date, the government has introduced a banking executive accountability regime, increased civil and criminal penalties for financial misconduct, set up a one-stop shop to resolve complaints, appointed a "special prosecutor" and given ASIC A$70.1 million ($76.5m) for a revamped strategy and enforcement.