Bank accountability proposals run into conflict with human rights laws

Plans to reverse the burden of proof on top executives at banks – meaning they would have to prove they were not responsible for failings rather than force regulators to prove that they were – could be affected.

Powers to strip bonuses from bosses at taxpayer-backed banks may also need to be tweaked to ensure they comply with the European legislation.

In both cases, policymakers say that the proposals need to be considered carefully by the Prudential Regulation Authority, an arm of the Bank, to ensure they meet human rights requirements.

The comments emerged in the Bank of England’s response to the Parliamentary Commission on Banking Standards.

The commission was set up in the wake of the financial crisis that saw a series of City institutions brought to their knees, and the Libor rate-rigging scandal, raising questions about how the banks operated and were regulated.

The Government has indicated that senior executives would be subject to a “reverse burden of proof”, meaning they would be disciplined for rule breaches in their area of responsibility if they did not take reasonable steps to stop them. This would turn on its head the conventional requirement for authorities to have to prove a case against an individual.