Reserve Bank governor Phillip Lowe is appalled by the behaviour of Australia's banks.

Dr Lowe has unleashed on the banks’ dodgy practices, blaming remuneration that rewards sales for the scandals.

The banking royal commission is “showing the benefit of sunlight” being shone on shady banks.

“Sunlight is acting as a very good disinfectant here. We need this disinfectant, and it actually working,” Dr Lowe told a House of Representatives economic committee hearing this week.

“Like most Australians I have been following what's been happening very carefully, and I have to say I'm incredibly disappointed and in many cases I've been appalled.”

Dr Lowe leads one of the banking sector’s major regulators, and chairs the Council of Financial Regulators which includes APRA, ASIC and Treasury.

Dr Lowe said finance needs trust, delivering service and good risk management.

“What we've seen in the royal commission is deficiencies in all those three areas.”

“There's not enough attention paid to customer service and doing the right thing by customers.

“The second common theme that I've detected through the hearings is the role that remuneration structures within financial institutions play in driving behaviour.

“We've seen remuneration structures that have driven quite poor behaviour.

“We need to rebuild trust, we need to have a very strong focus on service rather than sales and risk management.”