The banking system in Britain is in dire need of a radical reform to make sure that the tax payers are not asked to fund a lender who has failed because of its own mistakes, a group of MPs said recently.

The radical reforms that are being talked about also include possible demerger of the large banks, who seem too big to fail, as it is requested by the Treasury Committee to the government.

The banks might also be asked to maintain a higher cash pile to meet any immediate short-term funding problems faced by them. This is in order to boost their financial health and establish a close relationship between risk and reward.

Head of the Treasure Committee, John McFall said that considering the fact that no one can guarantee non-occurrence of another failure, it's of utmost important that "wider structural reforms remains on agenda" apart from risk management and regulation.

The MPs also suggested enforcing 'living wills' concept on the banks. This would make bankers stay away from taking extra-high risk in terms of lending to the bank assuming that at the end of the day it would get bailed out.