Sants (pictured), who presided over the regulator during the financial crisis, is alleged to have been recommended for the award by Chancellor George Osborne, who also encouraged him to stay on after his decision to retire in 2010.
Politicians from across the spectrum alleged Osborne had offered Sants a knighthood in order to persuade him to continue in his role.
Conservative MP Douglas Carswell told the FT: "Surely this says something about how diseased the body politic has become, when decisions about who is regulating our banks are made on the basis of baubles.
"If this is true, then a knighthood is becoming almost as debased a currency as the British pound."
Pat McFadden, Labour MP and member of the Commons Treasury committee added: "At a time when the country is still paying for the financial crisis, I think most people will find it odd that someone in a key regulatory position during that period ends up being knighted - especially when British heroes like Mo Farah were not."
Separately, a member of the public, Roger C, has set up a community petition on Avaaz.org that asks for Sants' nomination for knighthood to be withdrawn.
Roger gave his reasons for setting up the petition, which currently has 380 signatures, as follows:
"I am shocked that the government has nominated Hector Sants for a knighthood. Along with many other politicians, bankers and regulators, he was according to MP's 'asleep at the wheel' and in part responsible for the financial crisis that ordinary people are having to pay for.
"It is wrong that he and others are rewarded for failing the people, and we call for: 1. His name to be withdrawn from the honours list immediately, and 2. For all others responsible for contributing to the financial crisis, to be barred from nomination for honours for a period of at least 10 years."