A commission of MPs and peers, set up to review the banking industry in the wake of a series of crises and scandals, says government proposals for reform "fall well short of what is required".
The Parliamentary Commission on Banking Standards welcomes Treasury plans to force banks to "ring fence" customers' deposits to keep them safe if a bank fails.
But it says tough sanctions must be available to deal with banks that do not comply.
Anthony Browne, the chief executive of the British Bankers' Association, told Today presenter Evan Davis that "regulators are getting a lot more powers" to enforce ring-fencing to stop banks getting round it.
"The report does suggest other ways to enforce it," he added.
"They recommend a legal duty on directors to preserve the integrity of the ring fence", he said, and explained that directors of banks would be "required to do that".
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