The Treasury Committee has accused the FSA of not doing enough to tackle the bank bonus culture.
However, it is concerned the FSA's Turner Review downplays the role remuneration played in causing the banking crisis and questions whether the regulator is attaching sufficient priority to tackling the issue.
Committee chairman John McFall says: "Our report outlines clear failings in the remuneration committees within the banking sector, with non-executive directors all too willing to sanction the ratcheting up of senior managers' pay, whilst setting relatively undemanding performance targets.
"Looking forward, we are also concerned that the FSA seems not be taking tackling this issue seriously enough."
The Committee's findings will fuel IFAs' anger after many have complained in the past the regulator is focusing all its attention on adviser remuneration and neglecting the banking sector.
The Report proposes a number of reforms to remuneration more widely in the banking sector. These include: enhanced disclosure requirements on firms about their remuneration structures and about remuneration below board-level; reforms to remuneration committees to make them more transparent and a Code of Ethics for remuneration consultants.
McFall says: "If bonuses were prohibited at the part-nationalised banks, they could struggle to retain and recruit the staff they need, to the detriment of the taxpayer as a major shareholder in both institutions.
"However, as a major shareholder, the taxpayer is also entitled to transparency and accountability regarding pay structures and how they relate to performance. Rewards for failure must not be repeated. This applies not just to Lloyds and RBS, but across the board."IFAonline
Industry Voice: Scottish Widows pension expert Robert Cochran and economist Andrew Scott discuss the future of employment and income, in episode three of Scottish Widows' podcast series.
What made financial headlines over the weekend?
Follows McVey's resignation
Schroders and Aviva Investors
LightTower Partners, Seneca Partners and Unicorn AM