Senior bankers found guilty of reckless misconduct should face jail, according to a new report.
The Parliamentary Commission on Banking Standards, which was put in place by chancellor George Osborne after several scandals rocked the industry, recommended the move in order to deter any further misconduct.
It also said some bonuses should be stopped for as long as a decade and poured scorn on the lack of accountability in the industry.
The Treasury has welcomed the report and said it will provide its response before the summer break, with new legislation being a possibility.
"Where legislation is needed, we have said we will support it, and the banking bill currently before parliament can be amended to ensure they are quickly enacted," a spokesman stated.
The report notes that senior bankers and anyone in a position to cause serious harm should adhere to a new set of standards set by industry regulators and banks should be legally required to put financial safety ahead of shareholder interests.
By Gary Cooper