As the royal commission resumes on Monday, there is still a major piece missing in the puzzle that the commissioner, Kenneth Hayne, and his team must put together in order for everyone to better understand why misconduct in the Australian financial system has been so rampant over the years.

Australia currently has all the necessary laws in place to protect society from banks committing financial crimes. But that is only in theory. The reality is that there has been no proper prosecution of systemic deceit and frauds committed against retail customers of our financial institutions. Misconduct has included charging fees to dead customers and deliberately misleading regulators.

It is no secret that alleged victims never get their voice and allegation properly heard by the regulator

In a normal world, when a bank commits a financial crime against a customer, that person approaches the financial regulator to report what has happened.

It’s no different to when a person reports to the police that they were a victim of a crime such as theft or assault. But in these financial cases, the victim knows exactly who has committed the crime. And more often than not, these alleged financial crimes such as mortgage fraud leave a paper trail.

So the cost for financial regulators such as the Australian Securities and Investments Commission (Asic) and the Australian Prudential Regulation Authority (Apra) to investigate the cases are incredibly low relative to the resources required to investigate a stolen vehicle or burglary.

Thus the royal commission teams will have to ask the toughest, most important questions: why does Asic not properly investigate allegations of financial crimes committed by a major bank reported by customers. And why has Apra hidden systemic financial misconducts and derelictions from the public eye and those who fund bank operations?

First in relation to Asic, when investigating individual cases of financial crimes such as mortgage fraud, it is no secret that alleged victims never get their voice and allegation properly heard by the regulator. Asic’s track record of sending to alleged victims the same letters advising it would not pursue the allegations is impeccable, despite most alleged victims having paper trails identifying how they were a victim of financial crime. Why?

Second, Apra, which is responsible for assuring stability in the financial system, appears to have hid from the public (and those very large funds who provide Aussie banks substantial funds to operate) systemic misconduct. It has also allowed banks to conduct business outside the scope of the laws they are supposed to uphold, including those related to this country’s largest business, the mortgage market.

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The shortcomings of Apra and Asic have also diminished the power of consumers. When regulators facilitate or hide from the public the misconduct of one bank, it leaves its competitors who abide by the rules (seemingly very few of them in Australia) at a severe disadvantage as consumers have no clue which bank acts more ethically.

Therefore the Hayne commission must adequately address the failings of the regulators. The highly paid officials at Apra and Asic have managed to dodge many questions by members of the public and journalists about their failure to use the laws of the land to protect consumers. The minimum should be naming and shaming of those public servants responsible but there must also be severe punishment if there is found to be any regulatory obstructions of justice.

So if the Hayne commission does decide to interrogate our regulators in a way that we have not seen before, many people who have been a victim of financial misconduct will receive their first small piece of justice. History tells us regulatory neglect is just as dangerous as the financial crime committed.

• Lindsay David is the author of Australia: Boom to Bust and Print: The Central Bankers Bubble