* Proposals could become law early next year
* Proposals part of overhaul of UK banking sector (Adds details, quotes)
LONDON, Oct 1 (Reuters) - Senior bankers in Britain could face a maximum jail term of seven years if they are found guilty of reckless misconduct, draft laws published on Tuesday said.
The sentence was included in a wide-ranging set of proposed amendments to the Banking Reform Bill which the government is using to overhaul Britain's banking industry in the wake of the 2008 financial crisis.
A cross-party panel of lawmakers recommended introducing the charge of "reckless misconduct in the management of a bank" earlier this year as one of many steps to clean up Britain's banking culture and improve governance standards.
The government has backed most of those recommendations, and laid out the 86 changes it wants to make to the current draft banking bill to implement them. If approved, these could become law early next year.
"Today's amendments mark the final part of the government's plan for the biggest ever overhaul of the UK banking system," a finance ministry spokesman said.
The new offence would apply to those listed on a newly-established register of senior bankers if they make decisions which lead to the failure of a bank, or fail to stop other making such decisions.
"The maximum sentence for the new offence is seven years in prison and/or an unlimited fine," a briefing note by the finance ministry said. "The new offence will strengthen individual accountability for senior bankers, and act as a deterrent against misconduct." (Reporting by William James; Editing by Matt Scuffham)