Changes to banking structures and incentives over the past 40 years are to blame for the financial crisis and should be considered in the banking reform, according to the Investment Management Association.
Responding to the Commission on Banking Standards consultation, the IMA said large payouts and underlying incentive structures were encouraging traders and executives to take more risks and focus on short-term gains rather than long-term return on assets.
The IMA similarly cited from the Financial Services Authority's Turner Review in 2009 which stated there was concern for remuneration policies rewarding short-term revenue.
This contrasted with the attitude of the asset management industry where an asset manager's client money is segregated from those of the firm and the managers' activities do not put the firm at risk.
Richard Saunders, chief executive of the IMA, said: "While debate continues about the contribution of regulators and of monetary policy, there is no doubt that the conduct of the banks, together with the incentives underlying that conduct, were key factors in what has happened with the banks and the economy over the last five years.

"These incentives need to be addressed, including the business models of many banks, the impact on funding costs of the implicit (or these days not-so-implicit) Government guarantees they enjoy, and accounting rules which no longer err on the side of prudence.
"Questions need to be asked about the universal banking model under which banks not only transact with their customers but also purport to offer guidance and advice. There is an inherent conflict of interest between the two if you are holding yourself out as offering a service while in reality treating your customer as an equal party to a transaction."
He also warned the Government should reconsider its decisions regarding interest rate swap sales and follow proposals in the Vickers' report preventing derivatives being sold by retail banks.