Consumer advocate Choice said on Tuesday that the federal government needs to exercise stricter oversight function on Australia's banking industry in light of the reported harassment utilised by some major banks in demanding payments from beleaguered borrowers.

Dailies published by media group Fairfax have carried reports of alleged pressures applied by the Australia New Zealand Banking Group (ANZ) and National Australia Bank Ltd (NAB) on some of their debtors, with some even made aware that they could be facing lawsuits.

Choice said that the tactics employed by the two giant banks were in clear violation of the established consumer guidelines though both NAB and ANZ described the allegations as mere isolated cases as they gave assurances that actions were being taken to address the issue.

The whole issue was a big let down, according to Choice spokesman Christopher Zinn, as he stressed that banks, specifically the more established ones, should observe and follow the industry's rules, regulations and codes in ensuring that "the worst excesses of the bad old days of debt collectors shouldn't exist anymore."

Mr Zinn stressed that more is expected from the country's major banks, asserting that "you might expect some of the fringe lenders to play some of these tricks but the fact that it is people from the big four banks, who should have their compliance really screwed down, is very disappointing."

He reiterated Choice's stance of establishing an effective oversight and solid leadership that would monitor such nefarious activities from the banking sector in the absence of the industry's ability to implement a more dignified means of collecting debts.