Federal banking regulators have sold many in Congress on the notion that bank deregulation will promote competition and bring consumers better service at lower cost.

Consumer groups, however, haven't bought the idea.

That was the consensus yesterday as representatives of several public interest groups testified before the House Banking Committee on proposals to allow banks to expand into securities, real estate, insurance and other financial service markets.

"It's irrelevant to us whether {banks} get new powers or not as long as they're doing what they're supposed to be doing under law," said Mildred Brown, president of the Association of Community Organizations for Reform Now. "We're looking at fairness. We expect fairness."

Most banks have failed to fulfill community investment promises required by current law, she and other consumer advocates said, and Congress should give banks new powers only in exchange for promises to provide better service to low- and middle-income customers.

Some customers are likely to benefit from deregulation -- as the Reagan-appointed regulators suggest -- but they are likely to be corporate clients and wealthly individuals, Brown and others said.

Allen J. Fishbein, general counsel for the Center for Community Change, said that allowing banks to sell securities could make affluent consumers, who buy such products, more valuable to banks and make low-income consumers, who can't afford to buy stocks and bonds, even less valuable.

"That could enforce a trend we already see under way ... for banks to focus their marketing efforts on affluent and highly specialized customers," he said, and it could create a more sharply drawn division between rich and poor bank consumers.

Even as the consumer groups expressed their doubts about the benefits of bank deregulation, a senior Treasury Department official was telling the Senate Banking Committee that the Reagan administration endorses a bank deregulation bill sponsored by Sens. William Proxmire (D-Wis.) and Jake Garn (R-Utah).

The Proxmire-Garn bill would permit banks and securities firms to affiliate through a parent holding company. It contains no specific provisions aimed at consumer service, but would bar the largest banks from merging with the largest securities firms.

George D. Gould, Treasury undersecretary for finance, said the bill "truly serves the public interest. Not only is it procompetitive and proconsumer ... but it adheres to high standards of safety and soundness."

Gould's only criticism of the bill was that it curbs states' rights by increasing federal regulation of securities activities of state-chartered banks that are not members of the Federal Reserve System.