Lord Hunt, who served in the Cabinets of Margaret Thatcher and Sir John Major, has called for British bank staff to sign up to a code of professional conduct.
The former Wales and Education Secretary has asked Sir Richard Lambert to introduce this code, as well as a qualifications framework for bankers, as part of a review into the creation of a body to rebuild the reputation of the discredited industry.
Next week, ex-CBI director general Sir Richard will publish his initial thoughts on establishing the organisation, as recommended by the Parliamentary Commission on Banking Standards last year. This will kick off a short consultation ahead of a final report expected at the end of March.
Lord Hunt is keen that the new body be based partly on the experiences of the Lending Standards Board, which he has chaired since 2011. The LSB oversees a lending code that is designed to protect small borrowers, such as charities with an annual income of less than £1m, from poor marketing material and hidden interest rate changes.
In a document submitted to Sir Richard and seen by The Independent, the LSB said that an Independent Banking Standards Board should initially focus on small business and personal customers.
The LSB added there was a "public perception of bankers being replaced with unqualified sales staff", while many of those dealing with customers directly are trained "with a heavy emphasis on selling".
The IBSB must have the power to ensure that banks are hiring people with suitable qualifications for the role they work in. "All staff working in banks should sign up to a new code of professional conduct," the submission argued.
"As well as setting the key standards in the code, the IBSB should audit the mechanisms that banks have to ensure staff adhere to these standards." It added the IBSB should ensure the firms "take appropriate disciplinary action, including dismissal, against staff who fail to act appropriately".
Lord Hunt argued that the new body must have "teeth", while Sir Richard said this was a "useful submission".