Instead, the report simply posed the question of whether the UK should introduce product regulation in the mortgage market, but admitted it would be “premature” to recommend specific action. It appears that the FSA are unsure of whether such strict regulation would further cripple the ailing housing market.

However, Lord Turner did highlight some important changes that will be made in the FSA’s regulating style from now on, including the aim to focus on business strategies and system wide risks rather than internal processes and structures.

In what he called “arguably the greatest crisis in the history of finance capitalism,” Lord Turner called for banks to improve the quality and quantity of capital, with several times as much capital required to support risky trading activity and avoid further government bail outs.

Responding to recent controversy surrounding the City bonus culture, the report also stated that action would be taken to ensure that remuneration policies are designed to discourage excessive risk taking.

Lord Turner said: “The financial crisis has challenged the intellectual assumptions on which previous regulatory approaches were largely built, and in particular the theory of rational and self-correcting markets. Failure to look at the big picture was far more important to the origins of the crisis than any specific failures in supervising individual firms.”

Lord Turner went on to say: “The changes recommended are profound, and the banking system of the future will be different from that of the last decade.  The world’s economy will be better served as a result.”