A parliamentary inquiry into the big four banks has called for the Australian Securities and Investments Commission (ASIC) to have product intervention powers.

A House of Representatives Economics Committee report says ASIC should be able to ban harmful products and intervene on financial services providers’ product design and distribution obligations.

The committee also wants a broad review of ASIC’s enforcement regime to address key institutional drivers of poor financial advice.

It says enhancing public accountability in the sector would empower consumers to make more informed choices on financial advice.

One major recommendation would require a financial services licensee to contact all an adviser’s clients when it becomes aware the adviser has made a breach.

“The committee was disappointed to learn this is not standard industry practice,” the report says.

It is not a consumer’s job to monitor the ASIC website to learn about misconduct, the committee says.

At recent hearings NAB argued notifying all clients could create unnecessary stress in cases when poor advice was not systemic and there was no financial loss.

“This argument is not compelling,” the report says. “Customers have the right to know if they have been advised by someone that has been found guilty of misconduct.

“The financial advice industry needs to demonstrate that it has heard community concerns.”

The committee wants ASIC to establish an annual public report for the wealth management industry by the end of next year, detailing the overall quality of financial advice and misconduct by licensees and their representatives.

“The committee further recommends that ASIC report this information on an industry and individual service provider basis.”

The committee wants significant breaches made public within five days of being reported to the regulator, effective from July 1 next year, with reports including a description of the breach, steps taken to avoid a repeat, the names of senior executives responsible and reasons why they have not been fired.

It says this will motivate executives to “prioritise good consumer outcomes” and “force institutions to more comprehensively engage with questions of executive accountability on a more regular basis”.

In a dissenting report Labor members and the sole Greens member of the committee have renewed calls for a royal commission into the banking sector to examine issues such as vertical integration.