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LONDON (AP) — The U.K. government needs to get tougher in its proposals to reform the banking industry by splitting high-street activities from riskier investment banking, Britain's Parliamentary Commission on Banking Standards said Friday.

The commission reported Friday that proposals for a "ring-fence" to protect retail banks needed to be "electrified" to discourage banks from probing for loopholes. Commission chairman Andrew Tyrie says that would mean giving regulators the power to force a complete separation of a lender's retail business from its investment banking. Risky investments including exotic derivatives undermined banks' stability in 2008, prompting taxpayer bailouts of two big U.K. banks.

The government's proposals are to be presented as a bill to Parliament in 2013. The commission also criticized the reforms for lacking in detail, adding that relying on follow-up legislation to fill in the gaps "reinforces the risks to the durability of the ring-fence."

"It creates uncertainty for the regulators who will be charged with making the new framework operational and for the banks required to operate within it. The draft bill proposes to leave the government with too much scope to redefine the location of the ring-fence arbitrarily."

Banks have criticized the proposals, questioning whether ring-fencing retail activities would contribute much, if anything, to the industry's stability. The report will be a disappointment for Treasury chief George Osborne, who had warned the commission against proposing significant changes to the banking reform bill.

The commission said that the scandal of manipulating key lending indexes had "exposed a culture of culpable greed far removed from the interests of bank customers." British bank Barclays was fined $453 million by U.S. and U.K. regulators for attempts by employees to manipulate the London Interbank Offered Rate (LIBOR), and Swiss bank UBS was fined $1.5 billion this week for similar offenses.

Retail banking has not been immune from problems. Britain's biggest banks are facing billions in payouts to customers who were sold payment protection insurance which they did not need.