The small business ombudsman is supporting the sex industry in its fight for acceptance from banks.

Owners of brothels, escort agencies and adult-only retailers say they are subjected to financial discrimination, including being refused loans and merchant facilities seemingly on moral grounds.

Ombudsman Kate Carnell says the adult businesses which are “appropriately registered and regulated” have become victims of “hypocrisy” by the big banks.

“Access to banking services is essential for a legitimate business to operate,” Ms Carnell said.

“It's a bit rich for the banks to decide which industries are moral and which aren't.

“I think there would be lots of Australians that believe the banks are the last people that should be doing that.”

The ombudsmen’s attention was called by the Eros Association, an adult industry association formed in 1992.

Eros has reported on the banks’ mistreatment of several businesses, alleging discrimination from Commonwealth Bank, Westpac, NAB, ANZ, Bank of Queensland, Suncorp, Bendigo Bank, as well as merchant services including EFTPOS, AMEX, Afterpay, ZipPay and Shopify.

It said its surveys of adult industry businesses had found many are refused loans simply due to “being part of the adult industry”.

Eros claims the financial institutions are passing moral judgment on certain types of businesses due to their fear of “reputational risks”.

Ms Carnell said the skittishness about supporting the adult industry does not help efforts to combat the black economy.

The Australian adult industry employs around 25,000 people, and has an annual turnover of $2.6 billion.

“If you can't get a bank account, what it says to those small businesses in the sex industry is you'll need to operate in the cash economy,” Ms Carnell said.

“And that's the last thing we want people to do.

“We want people to be in the system ... [and] pay the amount of tax that they're supposed to pay.”

Ms Carnell has expressed the concerns the Australian Bankers Association.