Business Correspondent Rory Cellan-Jones reports

The Treasury select committee said senior managers of insurers and other pension providers should be called to account for advising thousands wrongly.

They should be personally fined or lose their jobs if their staff are responsible for wide-scale mis-selling, the report said.

Reduced commissions to protect consumers

The committee agreed with government estimates that the total cost of compensation for those mis-sold personal pensions in the late 1980s and early 1990s would exceed £10bn.

Thousands of workers were misled by their financial advisers who recommended they give up generous occupational pensions and take out personal pension plans.

This meant they missed out on higher pension benefits that would have accrued from their employers contributing to their pension accounts.

The report said the scandal marked "a failure in regulation which must not be allowed to happen again".

However, the Association of British Insurers says the mis-selling problem is too complex for individuals to be singled out for blame.

It called for more regulatory powers to be vested in the new super-regulator, the Financial Services Authority.

The committee also said that shareholders of firms found to have mis-sold pensions should bear some of the compensation costs, rather than the cost passed onto policy-holders by way of higher premiums.

Reduce commisions

The MPs found that undue emphasis on commission earnings by advisers was central to the mis-selling problem and that sales staff dependence on commission should be reduced.

Since the scandal, the insurance industry has signalled a move away from commission-based selling but it remains the main way advisers earn their revenue.

Some advisers operate on a commission-only basis - if they don't sell, they don't get paid.

The UK's biggest insurer Prudential recently announced new tougher sales targets for staff selling pension and other investments, prompting fears it could lead to a new round of inappropriate selling.

The government-ordered Pensions Review looking at who should be compensated for being mis-sold a pension is nearing the end of its first phase.

This phase sees firms providing compensation for urgent cases of those in or nearing retirement.

'Laggards' list

The Government has pursued a policy of 'naming and shaming' as well as fining firms that are slow to meet their review obligations.

Economic Treasury secretary Patricia Hewitt announced on Tuesday that eight firms including National Westminster and Allied Dunbar which have been removed from the monthly "laggards" list after taking steps to catch up,

This leaves 21 including Standard Life, Friends Provident, Equitable Life and Legal and General. still to with "a lot of work to do," she said.