MANY of us are still living with the consequences of the financial crisis that hit the UK a decade ago, causing a slew of UK banks to teeter on the brink of collapse.

The job losses, wage freezes and low pay that continue to make life difficult all emanated from that time, not least because it was the taxpayer that had to come to the rescue, officially to the tune of an eye-watering £850bn, though many believe the true cost of the meltdown may never be known.

We are constantly being reassured by the banks themselves, regulators and politicians alike that there will be no repeat of this crisis, thanks not only to tough new regulations but an industry that has learned its lesson.

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This contrite picture couldn’t be further from the truth, however, according to a new report from the respected Adam Smith Institute. Indeed the paper, by finance and economics expert Professor Kevin Dowd, describes the current state of the UK banking system as “an accident waiting to happen”.

The evidence put forward by Professor Dowd makes for extremely concerning reading. According to him, current Bank of England stress testing dramatically underestimates the vulnerabilities of the sector and risk to our economy; he also says UK banks remain highly-leveraged, with a 2007-08 level shock enough to cause another collapse that could prove to be much worse.

The academic also contends that appropriately stringent stress tests that use market values of bank capital would see all major UK banks fail, and that the current checks are not only useless – he compares them to “a cancer test that cannot detect cancer” - but ultimately damaging, because they offer false comfort and herd the banks into exactly the type of business models that caused the trouble a decade ago.

As to what should happen now, the Institute is urging the Bank of England to use the extra regulatory powers it was given in the aftermath of the last crisis to “improve the rules of the game” rather than micro-managing bank balance sheets.

Now, let’s not get too carried away - one report by an academic does not make a credit crunch. And, as pointed out by the Bank of England, there have been a number of positive changes to the system in the last 10 years, not least the fact that taxpayers should no longer be required to bail-out failing banks.

It’s also worth noting that if history tells us anything, it’s that there will inevitably be another financial crisis at some point - arguably what matters most is how well we are equipped to deal with the fallout.

But this latest report comes at a time of growing concern that UK banks have simply not learned the lessons of 10 years ago.

Arrogance was undoubtedly one of the factors that led to the collapse in 2007, and we must now ensure that complacency is not at the root of the next one, especially since consumers are still so keen to wrack up debt.

In the meantime, we can only hope Professor Dowd is wrong.