ASIC boss Greg Medcraft says penalties for bankers’ bad behaviour are not strong enough to be effective.

Mr Medcraft says if the Federal Government really wants “a law enforcement regime that works”, penalties must be tougher.

“If you're a law enforcement agency you've got to have penalties that actually hurt,” he said.

“Unfortunately ... people are deterred by the prospect of how serious a penalty's going to be. That is critical. As well as the funding for more surveillance, and then having penalties that actually work — that put the fear of God into people.”

Mr Medcraft says the Turnbull Government is taking its time in “reviewing” his recommendation to beef up the laws.

The chief of Australia’s corporate regulator also responded to claims ASIC has not done enough against rogue staff in the financial services sector.

Recent banking inquiries found no employees have been arrested or charged with criminal offences at the Commonwealth Bank despite piles of evidence of poor financial advice.

Similarly, no bankers suffered financial penalties either for pushing customer funds into inappropriate investments.

No staff from Comminsure (the Commonwealth Bank's insurance arm) have been charged with criminal offences despite intentionally avoiding payouts and delaying the payment of eligible claims to terminally ill customers.

ASIC has banned 29 financial advisers from the industry in the past 12 months.

Mr Medcraft said Australian banks should learn from the US, where banks occasionally sack staff to send a message of zero tolerance.

“I think going forward, the banks have really got to look at actually seeing what can be done in terms of terminating staff where in fact there is really a breach of their internal controls,” he said.

“I do think we've got to see a lot more frankly, we've got to see more individualised accountability, that's for sure.”

And again, he said, penalties need to be stronger.

“Doing something about penalties is absolutely critical. So what we want is actually the resources, in particular penalties, to have law enforcement that really hurts and makes a difference that actually underpins that confidence that every Australian expects and deserves.”