Treasurer Josh Frydenberg says charging fees to dead people and breaking rules around insurance advice to customers is "not good enough".
Banking royal commissioner Kenneth Hayne is due to release his interim report on Friday, highlighting problems with regulation of the sector and shocking examples of misconduct by some of the nation's biggest firms.
"Six rounds of hearings and more than 9300 submissions have made clear that some financial institutions have fallen far short of treating Australians honestly and fairly," Mr Frydenberg told AAP on Thursday.
"Fees charged to dead people, fees for no service and allegations of 300,000 breaches of providing unsolicited insurance advice, is simply not good enough."
The treasurer said the commissioner and his team had done an outstanding job to date and he looked forward to receiving the interim report.
His comments came as Assistant Treasurer Stuart Robert drew criticism for arguing there will always be misconduct in the financial services sector.
During a gaffe-filled interview in which he was busted taking a selfie on air and confusing debt with deficit, Mr Robert claimed there would always be problems with the big banks.
"If we think for a second that government can solve all problems and provide nirvana for every organisation we're kidding ourselves," he told Sky News.
"But we should expect organisations to behave appropriately and properly."
Mr Robert said regulation, codes of practice and consumers would go some way to driving change.
"What we also need is banking executives to behave like decent human beings."
Opposition financial services spokeswoman Claire O'Neil said it was disappointing for the assistant treasurer to infer banking misconduct was inevitable.
"Labor does not accept that this is a way that business is done in this country," she told reporters in Sydney.
"These banks - the big banks, the institutions that have been examined in the royal commission - have ripped off thousands of Australians and we cannot allow this to happen again."
Ms O'Neil wants the royal commission extended so thousands more victims can tell their personal stories.
Only 27 victims have so far had their stories heard out of the 9300 submissions.
"We're particularly concerned the commission hasn't been given the time to travel to more places in Australia - particularly regional areas - to hear from banking victims," she said.
Before the interim report, the government has announced draft laws increasing the maximum jail penalties for certain financial crimes, and introducing a formula to calculate penalties.
The laws will also significantly increase the financial penalties for civil breaches and give courts discretion to strip contraveners of their ill-gotten gains in civil penalty proceedings.
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