One professional standards board is needed with "substantial powers" to penalise firms which have been shown to be guilty of malpractice.

That is the view of the Chartered Insurance Institute (CII), which would like the body to be independent and to maintain standards in the retail financial sector, which includes life, car and home insurance.

It should also promote ethical behaviour and ongoing professional development in the industry.

The recommendations were published in a report in response to the Financial Services Authority's Retail Distribution Review (RDR).

Group chief executive at CII, Sandy Scott, said he thought the public could only benefit from the RDR findings and that the professional body the CII was proposing would be in their best interest as it would be able to punish professional malpractice.

He added that there would be a cost in setting up the framework but this would be "insignificant" compared to the potential benefits.

"The prize is a more confident and trusted industry," he said.

Both the RDR and the proposal by the CII are widely seen as an attempt to regain consumer confidence after the endowment and pension miss-selling scandals.

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