A heavy campaign of lobbying by Australia’s banks preceded the treasurer, Josh Frydenberg, telling financial regulators not to enforce responsible lending laws “too stringently”, Guardian Australia can reveal.

Regulators have been left with whiplash by a sudden change in the tone of government remarks over the past month, from a generally tough-on-banks stance following the Hayne royal commission to a new emphasis on the “personal responsibility” of borrowers.

The chief executive of the Australian Banking Association, Anna Bligh, said the peak body had lobbied widely on the issue.

“Of course I have spoken to government ministers, shadow ministers, other members of parliament and regulators about the application of responsible lending laws, a significant issue of critical importance to our economy being debated across the country, from the boardroom of the Reserve Bank to local backyard barbecues,” she said.

“Banks have been on the record for many months on this issue and made no secret of their desire to ensure the right balance is struck between lending responsibly and ensuring the free flow of credit which is of critical importance to the economy.”

The government has previously talked about the importance of keeping credit flowing, but its rhetoric has become increasingly sharp in recent weeks, with any criticism of banks now focusing on decisions that tend to curb borrowing and spending.

On Tuesday Frydenberg called on the banks to pass on all of a 25-basis point rate cut that the Reserve Bank governor, Philip Lowe, said was needed to counteract weak household spending and low wages growth – pressure defied by Australia’s biggest bank, the Commonwealth. In a media interview on Wednesday, the prime minister accused the banks of profiteering by not passing on the full rate cut. “The banks are basically profiteering,” Scott Morrison said. “The public will judge them but I am not buying it.”

Last Thursday, Frydenberg told a property forum that “the shadow of the royal commission and recent litigation has given rise to uncertainty as to how [responsible lending rules] ought to be implemented in practice”.

“The values of personal responsibility and personal accountability must remain central to our society and if the pendulum swings too far in the abrogation of these values, then it will inevitably reduce the availability of credit and increase its price,” he said.

“Should responsible lending laws be applied too stringently, they will also negatively impact consumer behaviour with consumers more likely to remain with their current provider than go through the red tape burden associated with looking for alternatives.”

On Monday Frydenberg criticised one of the big four banks for allegedly denying a couple a loan because of their spending on an in-vitro fertilisation program, the Daily Telegraph reported.

Speaking in New York the previous day, Scott Morrison said Australians should not be scared of “the animal spirits in our economy and the role of the banking and financial system in extending credit” and urged banks to “lean in” to the economy following the royal commission.

The government’s calls for banks to loosen the purse strings contrasts with new research from the investment bank UBS which found that so-called “liar loans”, where borrowers are not fully truthful in their applications for credit, have risen to a record 39% of the market.

First signs that the government would be striking a new tone on responsible lending appeared last month during a parliamentary committee hearing where government backbenchers, led by Victorian senator James Paterson and NSW lower house MP Jason Falinski, spent more than an hour applying the blowtorch to Australian Securities and Investments Commission chiefs over the regulator’s decision to appeal its loss in a responsible lending lawsuit against Westpac.

The rightwing thinktank the Institute of Public Affairs, where Paterson formerly worked, has attacked Asic’s conduct in the case, as well as mounting a wider campaign against regulatory “red tape” in the financial sector and the broader economy.

The lawsuit is popularly known as the “shiraz and wagyu” case because the federal court judge Nye Perram used the delicacies as examples of things borrowers could go without in order to afford their mortgage repayments, sparking outrage from consumer groups.

Regulators were stunned by the ferocity of the parliamentary questioning, and concerned that the attack could foreshadow additional moves to loosen the bonds of the scandal-prone finance sector.

But within Asic some comfort has been drawn from the fact the onslaught happened in public, rather than behind closed doors or through discreet telephone calls.

“That was the sound of the pendulum swinging back – hard,” one well-placed regulatory source told Guardian Australia.

Falinski declined to comment and referred inquiries to Paterson, who has been contacted but is travelling overseas.

Sources with knowledge of the lobbying process said the banks were very active in Canberra in the week before the hearing.

Two sources said Westpac had been the most aggressive in its lobbying efforts, but a source close to the bank said this was not correct.

“Everyone is saying Westpac in particular have been going a bit batshit crazy in Canberra and briefing anyone and everyone,” one regulatory source said.

Another senior regulatory source said other financial services businesses also lobbied hard.

“The big banks just want to do what they want,” the source said.

The source said this was despite the banks cleaning up their loan application processes for their own commercial reasons.

Asic’s vigorous treatment by the government backbenchers at the committee hearing also reflected the long-held view within the Liberal party that the market should be set free, a government source said.

“I think it’s a new government and they feel emboldened,” the source said.

The source said the stoush also probably indicated tension between Frydenberg’s office and Asic.

“These sort of things are rarely unsanctioned, to some degree,” the source said.

A spokeswoman for the treasurer declined to comment on whether he had spoken to Westpac or the Asic chairman, James Shipton, about the responsible lending issue.

“The treasurer regularly speaks with regulators, financial institutions, and large and small businesses about a range of issues within his portfolio,” she said.

Asic declined to comment.