Senior executives will be "named and shamed" if their bank is involved in misdemeanours after a parliamentary committee found the Big Four had been letting down their customers too frequently in too many ways.
In the first formal review of the four major banks following a series of financial scandals in recent years, the House of Representatives economics committee found too often these institutions have breached the trust of their customers.
"Banks must be much more accountable to consumers than they are today," Liberal MP and committee chairman David Coleman said in tabling the review's recommendations on Thursday.
Among the government-dominated committee's 10 recommendations is the establishment of a banking tribunal by July 1, 2017 to replace existing external dispute schemes.
It also calls for the naming and shaming of relevant senior banking executives and the consequences they face when there have been significant regulatory breaches, while calling on the consumer watchdog to make six monthly recommendations to improve competition.
"The recommendations contained in this report will substantially improve the banking sector if implemented," Mr Coleman said.
The banking industry insists it is already making major changes to address concerns about how bank staff are rewarded, the protection of whistleblowers, the handling of customer complaints, and dealing with poor conduct.
"Consumers are demanding action now and we are responding," Australian Bankers Association chief executive Steven Munchenberg said in acknowledging the review's findings.
But Labor members of the committee, in a dissenting report, said the recommendations lacked detail.
They stuck to their demand for a royal commission into the banking sector.
Opposition frontbencher Matt Thistlethwaite said government MPs on the committee represented the Turnbull government's "siding with the big banks".
"Labor has been listening to the victims, the Australian people, who are fed up with the actions of the banks and want something done about it," he told parliament.
"They want greater scrutiny of banking practices, they want the bank rip-offs to stop, they want the bank culture to change, and they want redress for victims when they fall foul of this insidious banking culture."
Greens MP Adam Bandt said the report was the government turning a "blind eye to bad behaviour".
"The big four banks suckle at the government's teat and receive billions of dollars in implicit subsidies," he said.
The review was a government response to calls for a royal commission, which Prime Minister Malcolm Turnbull has dismissed as too expensive and taking too long.
The committee intends to review the banks at least once a year.
Mr Coleman expects another inquiry will be held in March soon after the next public hearing of the Reserve Bank on February 24.
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