The head of Australia's corporate regulator has played down calls for a royal commission into banks, but also acknowledged that budget cuts have reduced surveillance of the financial sector.

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Australian Securities and Investments Commission chairman Greg Medcraft said his body has very similar evidence gathering powers to a royal commission.

"We have all the powers of search, of compelling testimony and accessing metadata and records in individual cases and collectively," he told the ABC's RN Breakfast program.

While saying the issue of whether or not to hold a royal commission into banks is "a matter for government", Mr Medcraft defended the performance of his organisation.

"The last few years we've achieved some of the longest sentences for insider trading, the largest penalties in the case of financial services," he added.

Sorry, this audio has expired ASIC Chair Greg Medcraft says trust in finance sector has been 'somewhat dented'

However, in calling for a royal commission, Labor said it could examine issues the corporate regulator cannot.

Shadow Treasurer Chris Bowen told the ABC's AM program that a royal commission could also look at the powers and performance of ASIC and other bodies.

"ASIC investigates individual cases, it does not investigate structural and systemic issues," he said.

"It certainly doesn't investigate whether the law of the land is adequate. It investigates whether the law of the land is being followed."

That is a statement disputed by the banking industry, which argues that ASIC and the bank regulator APRA both look at broader issues.

"Both of our major regulators, the prudential regulator and ASIC, have both got capacity to look at underlying cultural issues or systemic issues that they feel may be leading to some of these problems," the Australian Bankers Association's chief executive Steven Munchenberg told ABC's The Business program.

'Lower priority proactive surveillance removed'

A small but growing band of Coalition backbenchers have expressed their support for a royal commission.

However, senior Government ministers have dismissed the Opposition's call for the inquiry, arguing that the Australian Securities and Investments Commission already has substantial powers.

While backing that view, Mr Medcraft appeared to cast doubt on whether ASIC had sufficient funding to exercise its broad range of powers.

The Coalition Government cut $120 million from ASIC over four years in its 2014-15 budget, triggering the loss of 230 staff at the commission, and the ASIC boss said the regulator had become less proactive as a result.

"Proactive surveillance is discretionary because, at the end of the day, our reactive surveillance where we actually see something go wrong we have to enforce the law," he explained.

Sorry, this video has expired In the studio with top bank lobbyist Steven Munchenberg ( Elysse Morgan )

"Proactive surveillance is actually where we believe there could be a problem and we go out and look, and that is discretionary and so, what we do when we have cutbacks, we look at the priorities of our proactive surveillance and we adjust those, the lower priority ones are obviously removed."

Treasurer Scott Morrison recently indicated that the Government was open to the idea of increasing ASIC's funding from its current, reduced levels.

When asked further on potential funding increases today, Prime Minister Malcolm Turnbull stated: "We are giving our regulators greater power and we will continue to do that".

If you've got a complaint go to parliament, media: banks

When asked about how he felt about ASIC often relying on journalists to expose wrongdoing in the financial sector, such as recent investigations for the ABC and Fairfax media by Adele Ferguson, Mr Medcraft said the regulator cannot catch every wrongdoer.

"At the end of the day, we can't be on every street corner looking over ever person's shoulder and that's why we've actually said it's up to the gate keepers to actually think about their culture so that we don't get the wrong outcomes," he added.

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Mr Munchenberg dismissed the need for a royal commission, saying that people could always go to the media if the saw problems in the banking industry.

"I'm not sure what a royal commission is going to be able to find, given that we've had all of these inquiries, given that if people have got concerns, there have been a number of parliamentary inquiries where they could raise these concerns," he said.

"Clearly there are a number of media outlets, and journalists in particular, who have been very thorough in examining what the industry has been doing.

"So anyone who's got some concerns has had plenty of opportunity to raise those with regulators, with parliamentary inquiries or with journalists."