UK banks should ring fence of their retail banking divisions to protect their arms riskier investment banking, supported by the government, the Commission said.
Independent Commission of banks, led by Sir John Vickers said "make it easier and cheaper to solve than the banks in trouble."
The BPI has called for changes to be implemented in early 2019.
Chancellor George Osborne praised the "good" report and said he planned to meet the recommended schedule.
"This Commission has addressed the biggest problem we face in Britain, which is how we can be home a successful competing banks around the world, but to quote the British companies and British families, but at the same time protect taxpayers costs go wrong, and the end of a multi-million bill after a bank collapses, "he said.
"In my opinion, the Commission has done a great job."
Sir John Vickers, said the report "a fundamental and far-reaching."
Separate units
The report recommends that banks should be the boundary between the only operations allowed by the UK regulator to provide "mandatory services" which include deposits of individuals and small businesses.
He said that the different branches of banks should be separate legal entities with independent advice.
All Bank shares fell sharply, with Barclays, Lloyds and RBS all down around 4% HSBC 1.6%, while shares of the bank in the world were lower on Monday on fears of more the euro zone and the debt crisis.
Another recommendation is that the ICB banks need a buffer to absorb the impact of potential loss or future financial crisis - at least 10% of certain assets. This is a stiffer target than the 7% recommended by the International Basel Committee on Banking Supervision.
ICB report also says that the government should ensure that the planned sale of 632 branches of Lloyds Banking Group, leading to the emergence of "a strong contender for the bank."
The Commission also recommends that steps be taken to make it easier to switch bank accounts.
She wants a redirection service current account free to be formed by September 2013, with an improved system to capture all credits and debits to go to a former client, closed account, including automatic payments on credit cards and direct debits.
"Into the Unknown"
Business editor of the BBC, Robert Peston, has been called the most radical reform of UK banks in a generation and perhaps ever.
He said he would anger the largest UK banks, Royal Bank of Scotland (RBS) and Barclays.
Association (BBA) British Bankers' said the bank had already begun to make itself more secure.
"British banks are on track to implement radical reforms have already been reported and should be provided by the UK, EU and global authorities to make the banks and the most secure and ensure that banks may fail the future with investors and taxpayers protected the provision of finance to the economy remains, "said the BBA.
Michael Symonds, an analyst at Daiwa Capital Markets, said there was no risk that the changes could undermine the international competitiveness of UK banks.
"To the unknown we go, in terms of recommendations," said Symonds. "The main problem is actually that the UK is doing so only in their structural reforms and the potential damage that will do the competitiveness of the banking sector in the UK and the economy as a whole."
There is a perception that the regulation of British banks may lead some to leave the country in search of a place where regulation is lighter.
Sir John said he believed it was unlikely, at least as far as High Street bank was concerned.
The BIS was established last year to see how taxpayers can be protected against future banking crises.
The credit crisis eventually led to the nationalization by the government of Northern Rock and partial nationalization of Royal Bank of Scotland and Lloyds.
The government now has 83% stake and 41% of RBS and Lloyds, respectively.
The BIS said that his reform proposals could result in a pretax charge of between £ 4 billion ($ 6.4 million) and £ 7 billion to banks in Britain, Sir John said something that is unlikely to be felt by individuals.
He said the cost would be about one tenth in 1% to customers with the banks themselves to absorb some costs.
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