The group of MPs has made the case for a new separate body to deal with enforcement, as it published its review of the reports into the failure of HBOS today.

Andrew Tyrie MP, chairman of the Treasury Select Committee, said: “The case for placing the FCA’s enforcement function in a separate body – proposed by the PCBS in 2013 and later rejected by the Treasury – has been strengthened by the findings of Andrew Green’s report.

“A separate body would bolster the perception of the enforcement function’s independence, and provide the regulators with greater clarity over their objectives.

“The case for separation merits serious re-examination. The Treasury should appoint an independent person to undertake a review.”

The report draws together the findings of the FCA and the PRA’s review into the failure of HBOS, Andrew Green QC’s review of the enforcement decisions taken by the regulator, the independent review of these two reports by the Treasury Committee’s specialist advisers – Iain Cornish and Stuart Bernau - and oral evidence taken from the publishers of all three reports by the Treasury Committee in December 2015.

Mr Tyrie said: "The regulators failed, both before and after the HBOS crisis. Seven years after the bank’s collapse, we now know just how badly. And not because the regulators showed a spirit to learn the lessons of the past. It took persistent pressure from the Treasury Committee to ensure these failures weren’t swept under the carpet.

“So the HBOS experience calls for the FCA and the PRA to exhibit greater vigilance and energy if they are to win public confidence. This has on occasion been lacking.

“A lot is at stake. The plain fact is that the FSA did not succeed in protecting consumers from spectacular regulatory failures. The creation of the FCA and the PRA has been an opportunity to build something much better. This is still work in progress, particularly at the FCA.”

He said: “The regulators have frequently sought to mitigate their responsibility for being asleep at the wheel by referring to pressure from politicians to engage in ‘light touch’ regulation. But the FSA was given statutory independence precisely to ensure that it resisted calls for weak or inadequate regulation.

“The new regulators – the PRA and FCA – know that they must do better in future. They are on the case.

“Nor was Parliament alert enough, prior to the crash. Scrutiny of the regulators failed to flag up these weaknesses. The Treasury Committee intends to do what it can to ensure that the regulators do a better job.”

He added that the regulators also lacked some of the tools they needed to supervise the banks at the time – but now had these.