Australians should question any financial "junk" draining their purses following the release of the financial services royal commission's scathing interim report, a consumer advocacy firm says.
Insurance add-ons have been outed as ripe "junk" products for ripping off consumers, according to Alexandra Kelly from the Financial Rights Legal Centre.
The principal solicitor, who hears from people in financial stress every day, says consumers would feel surprised by the depth of misconduct uncovered during the banking royal commission, but they should also use the moment as an "awakening" to become more informed.
"A lot of consumers are getting a sense they were hard done by," Ms Kelly told AAP on Saturday.
"They will be expecting a lot more from their banks and financial service providers."
Ms Kelly said consumers should question the "uselessness of add-on insurance" and whether they are purchasing a product that has poor value and poor consumer outcomes, such as funeral insurance - which often had little or no benefit to the purchaser.
While the interim report, released on Friday, was comprehensive on the problems arising from a "profit over people" approach, Ms Kelly said it needed to delve further into the solution.
Royal Commissioner Kenneth Hayne QC slammed regulator ASIC for failing to mark and enforce the bounds of permissible behaviour, saying the misconduct either went unpunished or the consequences did not meet the seriousness of what occurred.
But the report missed the reason behind ASIC's failure, which was due to poor resourcing, Ms Kelly told AAP.
"They're spread quite thin. They have all these different conflicting things they're trying to do, let businesses innovate but hold back their worst excesses," she said.
"There's so few of them compared to the banking and insurance space."
Even when ASIC take the banks to court, they can't compete or hire legal counsels to match the banks, she said.
There also needed to be more people within ASIC with a consumer and advocacy focus, Ms Kelly said.
ASIC chair James Shipton noted the interim report's serious and important observations of ASIC's role as a regulator.
"ASIC will continue to assist the royal commission and to work with the government, the parliament and other regulators to build a stronger legislative, enforcement and regulatory framework with tougher penalties," he said.
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