Govt seeks consultation to strengthen ASIC

The Morrison government has moved a step closer to beefing up the powers of the securities watchdog as part of its aim to restore trust in the nation's banking system.

Treasurer Josh Frydenberg released draft legislation on Wednesday for consultation to strengthen the Australian Securities and Investments Commission's enforcement and supervision powers.

It includes strengthening ASIC's licensing powers by increasing the standards required of an Australian Financial Services entity, both at the time of application and on an ongoing basis.

It also extends the watchdog's powers to ban a person from performing functions in a financial services or credit business while harmonising ASIC's search warrant powers to bring them into line with the search warrant powers of the Crimes Act.

"The exposure draft legislation is further evidence of the government's commitment to strengthening financial regulators like ASIC and restoring trust in the financial system as part of our plan to build a stronger economy," Mr Frydenberg said in a statement.

Consultations close on October 9.