The chief executive of AMP will step down immediately following revelations from this week’s banking royal commission that the company had repeatedly lied to the regulator.

AMP’s board made the announcement on Friday, apologising for the company’s actions and saying the CEO, Craig Meller, will step down from his role with immediate effect.

It comes as the Turnbull government proposes slightly tougher new laws for bankers and finance executives who engage in corporate and financial misconduct.

Senior Coalition ministers are still coming to grips with shocking revelations from the banking royal commission this week. After having fought tooth and nail to oppose the commission ever being established, the government is now proposing bankers spend up to 10 years in jail under new proposed penalties.

It has proposed expanding the range of breaches subject to civil penalties, increasing the maximum civil penalty amounts that can be imposed by the courts and increasing penalties for the most serious criminal offences.

It has made the announcement following a week at the banking royal commission where the Commonwealth Bank admitted that its financial advisers had charged dead clients for financial advice.

The government’s proposals come from the corporate regulators’s enforcement review taskforce, which was established in 2016 in response to the Murray financial system inquiry.

The government says it will agree or agree in-principle to all 50 taskforce recommendations and will implement 30 of them.

They include increasing the maximum penalty for 19 of the most serious offences to 10 years’ imprisonment for individuals or $9.45m for corporations. These offences include knowingly providing defective disclosure documents to consumers, offering securities without appropriate disclosure and corporate fraud offences, which all currently carry a five-year jail term.

A further 43 offences will be subject to increases in jail terms. This includes people who continue to manage corporations after being disqualified, who will now be jailed for five years instead of one, and those who provide false or misleading information to the Australian Securities and Investments Commission will face five years’ jail time instead of two.

“These reforms represent the most significant increases to the maximum civil penalties, in some instances for more than 20 years,” Kelly O’Dwyer, the minister for financial services, said in a statement on Friday.

On Friday, AMP said it apologised “unreservedly” for misconduct and failures in regulatory disclosures in its advice business.

It said Mike Wilkins, a non-executive director of the AMP Limited board and former chief executive of IAG, had been appointed acting CEO to replace Mellor.

This week at the royal commission an AMP executive said he had lost count of the number of times AMP has misled the regulator about its practice of charging customers fees without providing any service.

Correspondence tendered in the royal commission showed AMP executives repeatedly lied to officials from Asic, saying they had mistakenly charged customers fees for no service when it was a deliberate policy.

The correspondence showed AMP was aware it was charging customers fees for 90 days for financial advice that it had no intention of providing, and then it did not want to stop the practice because it was profitable.

On Friday, following a severe backlash from shareholders that saw billions wiped from the value of AMP shares, AMP’s board finally moved to try to assuage the public’s concerns about the business.

It announced it would pursue an “immediate, comprehensive review” of AMP’s regulatory reporting and governance processes to be overseen by a retired judge or equivalent independent expert.

It said a board committee would be established to review the “issues” with its advice business revealed in the royal commission, to be chaired by Mike Wilkins and with assistance from external counsel King & Wood Mallesons.

“The group general counsel, Brian Salter, has agreed to take leave while the review is undertaken,” an AMP statement said. “David Cullen, AMP general counsel, governance has been appointed as acting group general counsel.”