Greg Medcraft, the chairman of the Australian Securities and Investments Commission, may well be regretting his since-retracted statement this week that Australia was a "bit of a paradise" for white-collar crime.

But if his aim was to attract attention to the issue of penalties for corporate wrongdoing in Australia, his lapse into frankness may well have done the trick.

Medcraft has been pushing for months for tougher penalties in this area. In February, he told a Senate committee that Australia's penalties were inadequate, with the criminal sanctions inconsistent and civil fines set too low.

In March, ASIC unveiled an 80-page report comparing the sorts of punishments overseas regulators can demand compared to what is available in Australia – with Australia's options at times looking paltry by comparison.

This week, Medcraft inadvertently stepped things up a notch, making his now-infamous "paradise" comments to a roomful of business journalists at a Q&A session in Sydney.

When it came to deterring white-collar crims, Medcraft said, "you have to lift the fear and suppress the greed".

"The thing that scares white-collar criminals is going to jail, and that's what scares them everywhere in the world.

"The penalties, particularly civil penalties, in Australia for white-collar offences are basically not strong enough, not tough enough."

The "paradise" comment may have seemed like a harmless bit of hyperbole designed to make a point – or, even, in the words of the Commonwealth Bank whistleblower Jeff Morris, a "moment of candour". But Medcraft soon backed away from his widely reported statement.

At a Senate estimates hearing the next day, he said he wanted to "correct" the comments as reported, having received a phone call from Finance Minister Mathias Cormann expressing his concern.

"Basically the point is that we want to make sure we don't become a paradise," the ASIC chair told the Senate committee.

One corporate spokesman labelled Medcraft's original statement as "unfortunate".

"I think they were out of character from the chairman," said John Brogden, the head of the Financial Services Council. "They don't reflect the conversations we've had with him ... I don't think Australia is a paradise for white-collar criminals at all. We have strong laws, we have strong regulations."

But the opposition defended Mr Medcraft, with shadow treasurer Chris Bowen on Friday saying he was concerned by Senator Cormann seeking to "countermand" Medcraft commenting on the issue.

"I have a lot of respect for Greg Medcraft and if he makes public comments they should be taken seriously. When a regulator says something, it's got to be taken very seriously."

And at least one of those present at Senate estimates this week agreed with what Mr Medcraft had said. Nationals senator John Williams, an outspoken critic of the financial advice sector who has pushed for widescale reform, told the hearing: "I've said for 5½ years that we should have a royal commission into white-collar crime because I believe Australia is, today, a paradise for white-collar crime."

Criminal charges are yet to flow from the Commonwealth Bank financial planning scandal, despite the allegations of fraud and forgery exposed by Morris and a Fairfax Media investigation.

Last month came news that those behind Firepower, the failed "miracle" fuel pill outfit, would not be pursued for criminal convictions by the Commonwealth Director of Public Prosecutions despite ASIC amassing a dossier of evidence in a years-long investigation.

And the penalty handed down in the most high-profile recent case of insider trading – that of former Gunns managing director John Gay – disappointed the "whole country", in Medcraft's own words. Gay was fined $50,000 and banned from managing corporations for five years.

The landmark Senate inquiry into ASIC's performance – launched in the wake of the Commonwealth Bank financial planning scandal - called for an inquiry into the civil and criminal penalties available across the various pieces of legislation administered by ASIC, including the Corporations Act.

But on Friday, as it responded to the report, the government handballed this recommendation – and a list of others – to the Murray inquiry examining Australia's financial system, which is due to report next month.

In calling for the inquiry into Australia's penalties for corporate wrongdoing, the Senate committee called for the idea of recouping financial benefits from transgressors to be considered.

Confiscating the profits from corporate wrongdoing – known as "disgorgement", is an option open to regulators in Canada, Hong Kong, Britain and the US, but not to ASIC.

ASIC's March report starkly highlights the contrast between the size of the penalties that can be levied in a country where such confiscation takes place, and those in Australia.

And even in other cases where such confiscation doesn't apply, the comparisons can seem outrageous.

In Australia the fine for providing a financial services without a licence – a criminal offence under the Corporations Act – is a maximum of $34,000. In Canada, it's $CAD5 million and in the US it's $US5 million.

In Australia, such an offence attracts a maximum prison sentence of two years. In Canada, it's five. In the US it is 20 years.

Yet in other areas, maximum sentences for insider trading were doubled in recent years. And the maximum sentence for market manipulation in Australia is the same as those in Canada and Hong Kong and more than in Britain.

Some argue ASIC could make better use of the penalties available to it – that the problem is one of enforcement.

"In some cases it's true that Australia's maximum penalties can be less than the maximum penalties overseas," said

corporate law expert Juliette Overland from Sydney University.

She agrees that there is a "good argument" for more consistency in sentencing of corporate wrongdoing in Australia.

But she says the focus should be on "deterrence up front, and the idea that if you engage in this conduct you will get caught", she said.

"The biggest problem with a lot of corporate crime is that it's so hard to uncover … if people think it's only a small chance you will get caught, they might still think it's worth a try."