The banking sector isn’t out of the woods after the Turnbull government announced tough new penalties as ‘disturbing’ practices were uncovered by the royal commission.

Individuals found guilty of misconduct in the finance sector will now face up to 10 years behind bars, while corporations could be fined up to 10 per cent of their turnover.

Treasurer Scott Morrison stressed the new measures had been considered over a long period of time, rather than a quick-fire response to evidence before the inquiry.

‘As disturbing and distressing as these things are, we need to ensure that our responses are well-considered,’ Mr Morrison said.

Assistant minister Jane Prentice backed a call from former competition watchdog chairman Allan Fels to stop banks from offering financial advice.

‘I do believe there should be a separation between people who benefit from the advice they give,’ Ms Prentice told ABC TV.

‘I’d like to see some more independent advice.’

More than $1.3 billion was wiped off the AMP’s market capitalisation this week, after its executives admitted to charging clients for advice they never received and repeatedly lying to the corporate watchdog.

AMP chief executive Craig Meller was the inquiry’s first major scalp, quitting on Friday before he was due to retire at the end of the year.

Commonwealth Bank of Australia has been under the spotlight, with the commission hearing one of its units had been extracting fees from dead people, in one case, for more than a decade.

Opposition Leader Bill Shorten labelled them ‘grave diggers’ before calling for ‘root and branch’ reform of the sector.

The intense scrutiny on the sector is likely to continue, with the government open to extending the inquiry beyond its current deadline, which is to provide a final report by February 1 next year.