A senior Westpac executive has told the banking royal commission it would be difficult to unwind the inherent conflict between sales and advice, because the first bank to do it would be at significant disadvantage.

Michael Wright, the head of Westpac's BT financial advice subsidiary, told the commission it would be "complicated" to remove grandfathered commission payments being made to financial advisers, despite the practice of conflicted sales being banned in 2013.

Mr Wright said the industry was mature enough to have a debate about ending the remaining commissions which are still being paid, but getting the debate underway would be difficult.

"The challenge for us is if an organisation stopped paying grandfathered commissions, the reality is it would put themselves at a very significant competitive disadvantage," Mr Wright said.

"The commissions being received by dealer groups would stop, and that would have significant brand damage on that product provider and their ability to provide advice."

In other developments at the royal commission today, AMP chief executive officer Craig Meller stepped down, after the royal commission was told this week that the financial services company had lied to ASIC for almost a decade to cover its practice of charging customers fees for advice that was never delivered, while Treasurer Scott Morrison and Opposition Leader Bill Shorten waged a slanging match over the Federal Government's previous opposition to setting up the inquiry.

The ongoing scandals revealed at the royal commission coincide with the Federal Government announcing tough new penalties, including a maximum of 10 years imprisonment for bankers and corporate criminals today, as well as maximum fines of $210 million for financial services companies.

'Industry on the cusp of becoming a true profession'

Mr Wright accepted the view put to him by senior counsel assisting the commission Rowena Orr QC, that clients were not always central to the considerations of financial advisors.

"I see financial advisers being professional. The industry is on the cusp of becoming a true profession," Mr Wright said.

Asked by Ms Orr whether financial advisers enjoyed the public trust of the likes of doctors and lawyers, Mr Wright conceded they did not.

"We haven't earned it yet," Mr Wright said.

Mr Wright said Westpac was establishing a new remuneration scheme for financial advisers which would address many concerns, but it would not be in place until October this year.

Loading

The changes include paying advisers in line with their qualifications and competency and only paying annual bonuses, rather than the current practice of monthly bonuses.

However, Mr Wright said advisers would still be paid on revenue accrued for sale of insurance products.

Commissioner Kenneth Hayne asked Mr Wright whether the chief challenge in framing a new remuneration system was rewarding good practice which has a dollar sign in it.

"You have a difficult task framing a remuneration policy in terms of not having a dollar sign in front of it," Mr Hayne said.

Mr Wright conceded under the proposed system there was still an incentive for advisers to over-sell insurance products.

Westpac has paid out $14.7 million in compensation

The introduction of the Future of Financial Advice (FOFA) reforms in 2013 does not appear to have shut down bad advice.

Westpac has so far paid out $14.7 million in compensation for inappropriate advice since FOFA was introduced.

Ms Orr put it to Mr Wright that on Westpac's own internal data, things have got worse.

"Yes. Unfortunately I don't think I can control away inappropriate advice in all cases," Mr Wright said.

"Some people will be dishonest, put their own interests before others, I can't control that away."