Australia's scandal-plagued banks were accused of putting profits before people and of failing to meet "basic standards of honesty" on Friday, as an official inquiry offered a scathing assessment of the sector.

The nearly 1,000 page Royal Commission interim report painted a picture of a sector defined by greed, forgiving of misconduct and frequently flirting with illegality.

Banks, insurers and other financial houses put "the pursuit of short-term profit at the expense of basic standards of honesty" the report said after almost a year spent considering 10,000 submissions and hearing from more than 100 witnesses.

It details examples of cash-stuffed envelopes being taken to pass dubious loans and fees being charged to customers who had died up to a decade before.

"When misconduct was revealed, it either went unpunished or the consequences did not meet the seriousness of what had been done," the report read.

The commission also accused regulators of being asleep at the wheel. "Much more often than not, when misconduct was revealed, little happened beyond apology," it said.