Australia's banking regulator says it had no knowledge of the Bank of Queensland's controversial new savings account that offers tickets in a monthly lottery rather than a competitive interest rate, despite claims it had approved it.

The account has been criticised for encouraging gambling because it requires customers to forgo an average 3.5 per cent in annual interest for the chance to win $20,000 a month.

In defending the account yesterday, Bank of Queensland (BoQ) chief executive David Liddy said the company had gone through two years of scrutiny and been approved by the Australian Prudential Regulation Authority, as well as and state lottery commissions.

But an APRA spokesperson said the regulator had only learned about the product yesterday. It had not approved the account, nor was it required to.

BoQ chief operating officer Ram Kangatharan was forced to defended his boss, who was on a flight when the revelation was made.

Mr Kangatharan apologised and said Mr Liddy had been mistaken.

However, he said the account had been given the go ahead by the relevant state and territory lottery commissions, who regulated savings accounts with trade promotions.

"We can basically go ahead with it," Mr Kangatharan said.

Consumer and anti-gambling advocates flagged legal action within hours of the product being revealed at the bank's full-year profit announcement in Brisbane yesterday, as revealed exclusively by brisbanetimes.com.au today.

Independent Senator Nick Xenophon, who staunchly opposes gambling, also spoke out about the account today.

Mr Xenophon said he would pursue authorities to explain why the product was approved and he intended to raise the issue in Senate Estimates next week.

The Win Account, to be launched on November 15, will be the first of its kind in Australia and is based on similar products in New Zealand.

It has few fees and offers an annual interest rate of 1 per cent, compared to most other savings accounts that offer about 4.5 per cent.

Customers will be lured to the Win Account on the chance they can win the $20,000 first prize in a monthly lottery, with an initial total prize pool of $30,000.

When a minimum $250 is deposited, each dollar in the account will earn a ticket in the lottery.

But a customer who deposits $1000 into the account stands to lose about $35 per year in interest.

Consumer groups GetUp! and Choice, which are already pursuing class action against 12 banks for what it claims are illegal fees, have mooted similar action against Bank of Queensland.

Choice spokesman Christopher Zinn said the account was "irresponsible" and would incite gambling, while GetUp! described it as an "unethical" banking practice.

The Salvation Army's head of problem gambling services, Gerard Byrne, said the product was unlikely to affect existing problem gamblers, who typically did not save money.

However, it would potentially incite new gamblers.

Mr Liddy said yesterday the bank had created the account because it was unable to offer competitive interest rates compared to the big four.

He rejected suggestions it would encourage gambling.

"It's not gambling. You're putting your money safely in a bank and being potentially rewarded ... you're not putting your capital at risk at all," Mr Liddy said.

"It's a unique account that will appeal to some people and some it won't. We're not trying to dictate to people what they do, people will make that choice.

"All our market research and the behaviour of the product in other markets suggests some people will love it, others won't touch it."