Britain’s banks should ring-fence their high street and investment divisions as part of a far-reaching reform package which should be put in place by 2019, a Government-appointed commission said today.

The protective firewall would be designed to "make it easier and less costly to resolve banks that get into trouble" and without taxpayers’ help, the Independent Commission on Banking (ICB) said.

Elsewhere in its highly-anticipated report, the ICB said the Government should ensure Lloyds Banking Group’s planned sale of 632 branches leads to the emergence of a "strong challenger bank" - but fell short of recommending that more branches should be sold.

Sir John Vickers and his fellow ICB members said the proposals - which will cost UK banks around £4bn to £7bn a year to put in place - will "put the UK banking system of 2019 on an altogether different basis from that 2007".