While Labor has pledged to implement the recommendation, Treasurer Josh Frydenberg has cautioned against embracing it in full, warning it could destroy the broking industry and give greater power to the big four banks.

Dr Lowe said the government was "right to be cautious about going the full way and making the borrower pay".

"There are legitimate competition issues and I think it is worth taking the time to work through those competition issues," he said.

Labor has also vowed to fast-track a key finding to scrap "grandfathered" fees for financial advisers by implementing the recommendation a year earlier than the Morrison government if elected.

Dr Lowe said by global standards Australian banks had a higher return on equity at about 13 per cent, compared to 10 per cent for their peers.

"It is a good question to ask or contemplate why it is that the Australian banks can earn, on average, higher rates on return on equity than similar banks overseas," he said.

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He said the sector may have lost sight of its mission as profits increased.

"Partly due to the internal remunerations within the financial institutions," he said.

"The financial institutions were very profitable for decades and when you are very profitable you probably don't do as much introspection as you should."

Dr Lowe said a more aggressive approach from regulators was required after the commission found they had been reluctant to pursue misconduct in the courts.

"Do the regulators need to punish bad behaviour?" said Dr Lowe. "The answer to that is yes. I think kind of a more aggressive approach by the Australian Securities and Investments Commission is called for. There needs to be accountability when things go wrong".

Overall, he said the royal commission's recommendations were balanced and contained much-needed reforms.

"It is not revolution, which we didn't need. We needed sensible, we needed pragmatic reform and that's what we've got," he said. "I really hope and expect that the banks learn the lessons."