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Lords report says failure of bank regulation 'partly to blame' for financial crisis.
The banking sector is set to be more closely scrutinised after an influential committee found the existing framework wanting.
A report published today by the Economic Affairs Committee suggested the failure of the existing regulation was partly to blame for the financial crisis.
Recommendations from the report outline the need for a closer focus on the risk models used by the banks.
Commenting on the report's findings, new Geoffrey Wood, professor of economics at the Cass Business School, said banks would be more likely to adopt "structures that are sensible and manageable" as a result of the current crisis.
The Economic Affairs Committee suggested that there was no need to rush into overarching legislation but some changes to the regulatory system should be made soon, suggesting the authorities should move quickly to develop policies on a range of issues highlighted by the crisis.
Recent research from Datamonitor shows the UK banking sector is likely to stay risk averse over the next decade and direct regulation will mean a strict approach to tackling risky practices by banks looking to lend.