The head of the financial system inquiry, David Murray, says there's only a case for a royal commission into the financial planning sector if there's evidence of criminal conduct.
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Mr Murray said that the Australian Securities and Investments Commission needed better resourcing, and financial planners needed better training.
There was no need for a royal commission "unless there's criminality", he said. "Otherwise there's probably no distinct benefit."
He was not supportive of a parliamentary inquiry either.
Assistant Treasurer Josh Frydenberg has already ruled out a federal inquiry into the sector, despite pressure from Labor and the Greens.
This pressure has built following revelations by Fairfax Media of recent financial planning scandals engulfing Commonwealth Bank and National Australia Bank.
Fairfax recently revealed that NAB had sacked or "moved on" 37 financial planners in the past two years and compensated 700 customers without informing the regulators.
Both ASIC and APRA have said they are keeping a close watch on the sector.
Mr Murray said the issues raised about the problems plaguing the industry were "serious issues" and "we've underestimated the knowledge gap between users of the system and the providers", he said.
The best way to deal with this was to lift standards in line with other professional services.
"One that puts us in the same paddock as pharmaceuticals professionals, medical professionals, lawyers and others, who have a well-worn track of professional accreditation - discipline that keeps those professions in good shape," he said.
"We're not going to getting confidence in users of the system until we build same structure in the financial planning sector."
Mr Murray said his report to government on how to improve the financial system suggested that ASIC be funded through a fee for service on industry.
"What needs to occur, if that happens, is there should be a baseline study of what ASIC really needs as a starting point," he said.
"I really think they need more [resources]," he said. "Everyone criticises them because of the nature of their work."
He said his report also recommended "serious up-skilling of people in the industry" and tougher licensing conditions.
There also needed to be an onus introduced on manufacturers and distributors of financial products to have better labelling of products that would indicate who it's intended for and "hold them to their position".
"These things are quite far reaching and I think if they're done and ASIC is resourced and held accountable, there would be sufficient change."
