The UK’s financial system remains at risk of upheaval despite the regulatory changes undertaken since the 2008 banking crisis, according to a thinktank.

A report published by the New Economics Foundation on Tuesday places the strength of the UK’s financial system last out of the G7 bloc of leading industrial countries, behind Japan, Germany, France, Italy, the US and Canada.

The report calls for further changes to the UK banking industry, including a full separation of high street banks from investment banks and more competition in the banking sector. It also suggests the health of the system could be improved by a rise in peer-to-peer lending, where savers lend money directly to individuals or small businesses.

“Far from being done and dusted, banking reform is serious unfinished business for the new government and there can be absolutely no room for complacency,” Tony Greenham, head of economics and finance at NEF, said.

Regulatory changes put in place since the crisis, which include requiring banks to hold more capital and erect a ringfence between their high street and investment banking arms, were at risk because of lobbying by the banking industry, he said.

The NEF report said there had been an improvement in the UK’s financial resilience since 2008 but not to the extent of other countries in the G7.

The British Bankers Association said: “The UK authorities are rightly regarded as being at the forefront in implementing new European rules that will ensure investors in banks – and not taxpayers – bear the cost of any future bank failure.”

• This article was amended on 2 June 2015. An earlier version said the NEF research placed the strength of the UK’s financial system fifth out of the G7 countries; in fact it placed the UK last.

