Andrew Tyrie, chairman of the Parliamentary Commission on Banking Standards, has written to the Financial Conduct Authority calling for a cap on the amount retail bank sales staff can earn.
Rewards for financial sales are being blamed for fuelling a spate of financial mis-selling scandals.
"Incentives have been deeply misaligned for significant numbers of front-line staff, not just highly remunerated traders or the most senior executives," said Tyrie.
"Deep cultural change is needed. Unless such issues are addressed now, the risk of conduct failure at some point in the future can only increase."
The PCBS took evidence between 21 September 2012 and 6 March 2013 to deliver a final 500-page report in June 2013.
During that time, it asked more than 9,000 questions and heard 161 hours of evidence from hundreds of witnesses, across 73 sessions.
Among a series of recommendations on how to clean up the British financial industry, it urged the government and regulators to crack down on bonuses, pay structures, and reward schemes.
It also recommended bankers be sent to jail more often.
"Taxpayers and customers have lost out. The economy has suffered. The reputation of the financial sector has been gravely damaged. Trust in banking has fallen to a new low," said Tyrie.
"Senior bankers who seriously damage their banks or put taxpayers' money at risk can expect to be fined, banned from the industry, or, in the worst cases, go to jail."
Over the last few years, a spate of mis-selling scandals has cost Britain's biggest banks billions of pounds in compensation payouts and admin charges.
Banks have so far set aside just over £16bn ($25bn, €18bn) to deal with the most expensive consumer scandal in British history but the industry's executives fear the total amount could hit a staggering £20bn.
On 27 January, the Royal Bank of Scotland revealed that it has set aside a further £465m for PPI mis-selling claims against the bank. The total provision for PPI claims against RBS is now £3.1bn.
Meanwhile, banks have collectively set aside just over £3bn to settle mis-sold derivatives claims.
Interest rate swap agreements are contracts between banks and customers where typically one side pays a floating or variable rate of interest and receives a fixed rate of interest payments in exchange.
Such contracts are used to hedge against extreme movements in market interest rates over a given period. Companies that saw the value of these products move against them as rates fell during the recession now owe banks inordinate sums of money in yearly interest payments.
Meanwhile, last month, the FCA imposed the largest-ever fine for retail conduct failings on Lloyds Banking Group after determining that its sales incentive schemes could pressure staff into mis-selling products to customers.
According to a FCA statement, Lloyds has incurred a £28m fine for failings at various businesses that it owns, including Lloyds TSB, Bank of Scotland and Halifax, which is part of Bank of Scotland.
The regulator said the incentive schemes put sales staff under pressure to hit targets, to get a bonus or avoid being demoted, rather than focus on what consumers may need or want.