Senior bankers found guilty of reckless misconduct in Britain could face prison sentences under harsh rules recommended by the Parliamentary Commission on Banking Standards on Wednesday.
In a report named "changing banking for good", the Commission outlined radical reforms aimed to hold bankers more accountable for their bank's actions.
Among many of the committee's recommendations is the creation of a code that defers bonuses for longer, and better aligns risk and rewards.
The Commission argued that remuneration should be deferred by up to 10 years to reflect the length of time it takes for profits and losses from banking transactions to be realized, and banks should also be given the right to claw back pay after employees leave a firm, as wrongdoing can take several years to come to light.
Meanwhile, the criminal offence would apply for the "most serious of failings," such as where a bank failed with substantial costs to the taxpayers, lasting consequences for the financial system, or serious harm to customers, said the report.
The Parliamentary Commission on Banking Standards was established in July 2012, in the wake of the LIBOR scandal, to conduct an inquiry into professional standards and culture in British banking sector and to make recommendations for legislative and other actions.