The crooked conduct of Australia’s big banks could soon be put to an end as corporate regulators begin to bare their teeth.

Westpac, CommInsure and AMP have all been hammered in the past week over a range of poor behaviour.

Commonwealth Bank’s life insurance arm pleaded guilty to illegally selling insurance on the phone, while Westpac faces court over 23 million breaches of anti-monetary laundering rules.

James Shipton, the chair of corporate watchdog ASIC, has separately pledged to personally look into claims that AMP continued to bill a deceased customer even after the shocking practice was uncovered by the banking royal commission.

It’s a notable change in behaviour for the regulators – particularly ASIC – according to former ACCC head Professor Allan Fels.

A breakdown of Australia’s regulators and their responsibilities.

“It does seem that ASIC and APRA are cracking down harder,” Professor Fels told The New Daily.

“They have had a tendency in the past to not prosecute, to not litigate, but to instead make agreements with businesses.”

In many cases, those agreements saw banks slapped with fines significantly smaller than the profits they made by exploiting customers.

Both the Productivity Commission and banking royal commissioner Kenneth Hayne similarly took the regulators to task over their poor record of keeping the banks honest in January.

And now, it seems those comments have been heard.

Professor Fels said financial regulators grow through three stages of development:

1. Deciding to litigate
2. Learning how to win at litigation
3. Regularly litigating and regularly winning.

ASIC’s recent efforts show it has moved from stage one to stage two.

It’s a start, but litigating is a difficult art, and the punishments ASIC are pursuing seem small relative to the banks’ crimes and misconduct.

In the case of CommInsure, the insurer is facing fines up to only $1.8 million for illegal phone sales to 87 customers made between October and December 2014.

The company is also separately remediating around 30,000 customers who bought life insurance over the phone between 2010 and 2014.

“It’s welcome,” Professor Fels said, “but more will have to be done before they prove themselves.”

The most interesting questions will arise if they seek jail sentences – that would be a very important marker.’’

Law too weak, not regulators

Gerard Brody, chief executive of advocacy group Consumer Action Law Centre (CALC), said it was encouraging to see the regulators take a tougher stance.

But Mr Brody said banks can still walk away from litigation relatively unharmed because the penalties imposed under current laws aren’t enough.

To use CommInsure as an example, the $1.8 million fine facing the company for its telesales campaign may be small in comparison to the banks’ profits but it is the maximum allowable penalty in criminal law.

ASIC couldn’t force the company to pay more, no matter how hard it tried.

“They’re going for the maximum criminal penalty, and that is what it is,” Mr Brody said.

Mr Brody said there are a number of questions to be answered regarding corporate criminal responsibility, but noted the Australian Law Reform Commission is currently reviewing the regime.

Banks still letting customers down

David Locke, chief executive and chief ombudsman of the Australian Financial Complaints Authority (AFCA) told The New Daily that banks are the most complained about financial institutions in Australia.

“In our first 12 months of operations, from the first of November last year, we’ve had 73,272 complaints,” Mr Locke said.

“If you look at who those complaints are against, the largest proportion relate to the banks; we’ve had 25,826 complaints against the banks.”

While AFCA is not a regulator, Mr Locke said one of its aims is to “work with the industry to improve complaints handling” going forward, and has made its complaints data publicly available to help inform regulators’ decisions.

“We’re a not-for-profit organisation, but we’re providing a public service and we think it’s important that the data is made freely available,” Mr Locke said.

“And we want financial institutions themselves to look at how they can improve their practices and try and resolve issues sooner.

“It’s much better if issues can be resolved by the financial service provider than people having to come to the ombudsman.”