New obligations ensuring the banking, insurance and superannuation industries act with honesty and care have been introduced to parliament.
Financial Services Minister Stephen Jones said the government's legislation would strengthen accountability.
The bill states entities in the financial industry should take steps to conduct their business with honesty, integrity, due skill, care and diligence.
Senior executives and other key personnel are subject to those same standards.
Mr Jones said the legislation underscored the government's commitment to take the necessary action in responding to the financial services royal commission's recommendations.
"Financial services executives make decisions that impact upon the lives of ordinary Australians who have got no choice other than to engage with the system in which they operate," he said.
"The community reasonably expects the high standards of accountability and integrity of financial services and directors and executives."
Mr Jones said the government decided to accept an amendment put forward by independent senator David Pocock, which clearly defines the scope of the minister's exemption power and to provide for parliamentary oversight.
Greens spokesman Nick McKim accused Labor of dropping million dollar fines for bankers, because the government had been "bought" by the major banks through donations.
"Clearly Labor cares more about donations than they do about integrity," he said.
Senator McKim said the Greens will be introducing amendments in the lower and upper houses to include civil penalties of up to $1.1 million for executives who breach their accountability obligations.
