Sir John Vickers, who chaired the Independent Commission on Banking (ICB), has said he "would not resist" a complete break-up of banks if so-called ring-fencing fails to achieve its desired effect.
Sir John and his colleagues on the ICB last year recommended that UK banks ring-fence their high-street or retail arms from high-risk investment divisions.
Members of the Parliamentary Commission on Banking Standards pressed Sir John, an outside runner for the role of Bank of England governor, over the prospect of fully separating the two divisions at a hearing.
The former Bank member told the commission: "If the industry turned out to be unreformable, it is possible that total separation would turn out to be the best step to take."
Lawmakers are currently determining the best way to implement the ICB reforms, which also included improving the way in which banks help customers switch accounts.
Chancellor George Osborne previously said the reforms would be fully implemented by 2019.
Legislation to implement the reforms will reach the statute book before the 2015 election, with a requirement for banks to build ring-fences "as soon as practically possible" after this date.
While banks initially met the reforms with some resistance, many have since become more open to the proposals and some, such as Lloyds Banking Group, have started to take steps to build the ring-fence.
In September, the former chairman of the US Federal Reserve Paul Volcker told reporters that plans to force banks in the UK to ring-fence would not work in the event of a bailout.
Mr Volcker - the architect of the "Volcker rule" - said the plans would only work in "fair-weather" conditions but not when banks were under pressure. In the US, the "Volcker Rule" advocates an outright ban on all forms of risky investment activity on the bank's own account, such as proprietary trading.