A UK government minister has suggested banks could sue the Bank of England over strict financial regulations aimed at preventing another crash.
Andrew Griffith, the City minister, raised the prospect of legal action against the Basel 3.1 reforms during a discussion with banking representatives, the Bloomberg news agency reports.
The reforms will require banks to hold more capital to issue customer loans, and some are unhappy with the new requirements.
The changes were broadly agreed internationally but are being implemented by local regulators.
Some banks think the implementation taken by the Bank of England’s regulator will put them at a competitive disadvantage to the EU.
A Treasury source told the Independent: “The Minister recognises the PRA’s role as the independent regulator, and its responsibility for aligning the UK with strong international banking standards.
“As is usual, any concerns from the sector regarding implementation should be raised with the independent regulator directly.”
The Treasury says the regulator’s consultation on the new rules is ongoing and that firms should respond to it.
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People familiar with the discussion said the minister’s comments came in response to concerns raised by the bank representatives at the meeting.
The Bank of England took over some financial regulation in 2013 with the establishment of its Prudential Regulation Authority, with a remit to ensure the financial system is on sound footing.
The aim of the Basel reforms is to avoid a repeat of the situation in the 2008 banking crisis where some banks held insufficient capital and got into trouble after borrowers began to default on highly leveraged loans.
Tulip Siddiq, Labour’s Shadow City Minister said: “Just months after they crashed the economy and undermined market confidence in our economic institutions, Conservative ministers are making incendiary comments about the Bank of England.
“Not only does this undermine confidence in the financial services sector that the UK is a safe place to invest, it also shows that the Conservatives can’t be trusted to protect our economic institutions.
“Labour would treat our economic institutions with respect, and create the stability we need to drive economic growth across our country.”
