Today, the commission published a 94-page report into the failure of HBOS which had to be bailed out by taxpayers and Lloyds Banking Group in 2008.
Commenting on the paper commission chairman Andrew Tyrie MP said fault lay with HBOS chairman Lord Stevenson and two former chief executives Sir James Crosby and Andy Hornby and called for them to be barred from the industry.
He said: "It is unsatisfactory that the FSA appears to have taken no steps to establish whether the former leaders of HBOS are fit and proper persons to hold the Approved Persons status elsewhere in the UK financial sector. The commission has therefore asked the regulator to consider whether these individuals should be barred from undertaking any future role in the sector."
Problems included a lack of banking experience among executives, insufficient attention paid to corporate lending and too much faith being placed in senior executives.
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The report read: "There was insufficient banking expertise among HBOS' top management. In consequence, they were incapable of understanding the risks that some elements of the business were running, let alone managing them."
Mr Tyrie said he was shocked that board members cited their time on the board as a "positive experience".
He said: "We are shocked and surprised that, even after the ship has run aground, so many of those who were on the bridge still seem so keen to congratulate themselves on their collective navigational skills."
The former Financial Services Authority did not escape criticism either due to "inadequate" regulation of HBOS from 2004-2007.
Mr Tyrie said: "From 2004 until the latter part of 2007 the FSA was not so much the dog that did not bark as a dog barking up the wrong tree.
"The FSA's approach also encouraged the Board of HBOS to believe that they could treat the regulator as a source of interference to be pushed back, rather than an independent source of guidance and, latterly, a necessary constraint upon the company's mistaken courses of action."

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