The Business Secretary, Vince Cable, is pressing for three former HBOS directors to be stripped of their current board roles and banned from ever being company directors.
Mr Cable has enlisted officials at the Insolvency Service to look at how the former HBOS chairman Lord Stevenson and former chief executives Sir James Crosby and Andy Hornby could be investigated under the Company Directors Disqualification Act to punish them for their roles in the collapse of HBOS in 2008. A rescue in a £20.5bn taxpayer bailout with Lloyds Banking Group left shareholders wiped out and thousands losing their jobs.
The steps by Mr Cable follow a damning report by the Parliamentary Commission on Banking Standards which accused the three of presiding over a "colossal failure". The report said they should not be allowed to run a financial company in the future, but Mr Cable wants to extend that to all companies.
Mr Cable told The Sunday Times that this is the "first step" in a process that could lead to them being banned as company directors for life.
"There are things I am able to do. I can ask [officials] to look at whether the companies investigations branch take action. We do have this power that I have begun to initiate," he said.
A spokesman for Mr Cable said: "The Business Secretary has instructed officials at the Insolvency Service to look into the Financial Conduct Authority report [a forthcoming report on banking] when it is published to see whether there are matters that could lead to further action."
There is scope under schedule 8 of the Act to push for disqualifications of directors.
Mr Cable's call puts pressure on Andy Hornby's role of chief executive at Gala Coral and Sir James Crosby's chairmanships of the car finance company Money Barn and the remuneration committee of the catering group Compass. Sir James has already stepped down as a member of Bridgepoint's European advisory board but the City was waiting for news of further resignations as pressure mounted.
Mr Cable said he was "surprised" that Mr Hornby and Lord Stevenson were "still active" in company life.
Sir James left the bank seven years ago, with a pension pot likely to pay out £690,000 a year.
Concerns over the positions of the former HBOS directors comes as Paul Moore, the man who blew the whistle on the failed bank's risk-taking culture, told The Independent on Sunday that HBOS's losses have still been underestimated by "billions". He said the Banking Standards report failed to show how bad the losses have been, with some estimating them as high as £10bn.
Peter Cummings, head of HBOS corporate banking from 2006 to 2008, is the only man to have been punished over the HBOS scandal. He was fined £500,000 and banned for life from working in the City.