Whistleblower Jeff Morris says nothing less than a royal commission into the banks will satisfy the victims of recent scandals.
Mr Morris, who famously blew the whistle on misconduct in the Commonwealth Bank's financial planning arm in 2008, said boosting funding for the corporate regulator was money wasted.
"Tens of thousands of victims have had their life savings destroyed, lost their homes, suffered tremendous hardship as a result of all these financial scandals," he told reporters in Sydney on Wednesday.
"I think if you ask the victims there wouldn't be too much doubt about what they want to see happen - and that is a royal commission.
"The most potent weapon in its armoury is the fact that it gets to the truth... and the truth is the great equaliser between the powerless victims and the powerful institutions."
Treasurer Scott Morrison on Wednesday announced banks will soon be forced to cough up an extra $121 million to "beef up" the Australian Securities and Investments Commission (ASIC), while fending off calls for a royal commission.
Mr Morris argued it was money down the drain, insisting ASIC had sat on the sidelines while innocent people were ripped off.
He said banks had never feared ASIC, and nobody "in their wildest dreams" considered the regulator a tough cop on the beat.
"ASIC has failed the victims of these scandals, and the reason I think is a disinterested and complacent culture," he said.
"You don't fix cultural problems by throwing money at it - funding itself isn't enough - indeed giving more funding to ASIC is just investing in a failed investment."
He also took exception at ASIC chairman Greg Medcraft being given an 18-month contract extension.
"I think that is a slap in the face to all of the victims of all of the scandals that have occurred on Mr Medcraft's watch," he said.
"I think what ASIC needs more than funding, or powers, or resources, is new leadership."
Mr Morris claimed the federal government was "running interference for the banks" in refusing to hold a royal commission into the finance sector.
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