Under the current rules, bonuses can be clawed back up to five years after they are awarded. In many cases financial rewards are deferred for up to this period to discourage any wrongdoing in the interim.
Anything from making a serious loss for their employers, demonstrating poor risk management through to serious ethical misconduct could trigger the clawbacks.
During a review in March, Bank of England governor Mark Carney hinted that bankers might face having to return their bonuses up to six years after they were awarded, for serious "misbehaviour".
However, the clawback period was only due to start after deferral periods, which meant some bankers would potentially have to return their bonuses more than 10 years after they were awarded.
Carney is expected to announce that under the new proposals the deferral and clawback period can overlap, meaning that after seven years the Bank of England will have no powers to reclaim awards.
The announcement comes in the same week that Lloyds Banking Group was fined £218 million for manipulating the Libor interest rates. Carney condemned the actions as "highly reprehensible".
"[This is] clearly unlawful and may amount to criminal conduct on the part of the individuals involved," he said.
Shadow chancellor Ed Balls told the BBC he regretted that Labour did not take stronger action on banking standards when they were in power.
"Most of the criticism of the Labour Government from the banking sector and the Conservative party was that we were much too tough on the banks," he said. "Now in retrospect, those criticisms were wrong because we should have been tougher."