Tougher bank industry curbs warning

Angela Knight, Chief Executive of the British Bankers Association (AP)

Government plans to tighten up regulation of the banking industry threaten to hamstring the sector and further add to the UK's lending woes, the British Bankers' Association (BBA) has warned.

Angela Knight, chief executive of the BBA, said at the group's annual conference in London that the impact of current swingeing changes to bank oversight had not been adequately thought through.

She called for the "right balance" in new rules for the industry, but admitted that "mistakes have been made" by banks in the UK and worldwide.

"There is a danger that an over-layering of multiple capital measures could result in undue constraint on the ability of banks to support households and firms lending," said Mrs Knight.

She added: "I believe insufficient attention has been paid to understanding the impact of changes to law, regulation and new capital requirements or the way they interrelate - this analysis needs to be done now so there change can be properly prioritised, planned and phased in."

The BBA also made a plea for an end to the apparent power struggle between the so-called Tripartite Authorities - the Bank of England, Financial Services Authority (FSA) and Treasury.

Bank of England demands for more responsibility under the new Banking Act have been growing louder in recent weeks, but appear to have fallen on deaf ears amid speculation of a rift between the central bank and the Chancellor.

Mrs Knight said that the responsibilities of each needed to be agreed urgently.

She said: "There are many views and they are all being expressed very publicly and openly.

"There are merits on all sides of the argument."