LONDON, Oct 20 (Reuters) - A decision by British financeminister George Osborne to scrap "guilty-until-proven-innocent"rules for bankers in Britain will help avoid legal uncertaintiesand does not represent a watering down of the reform, Britain'stop banking supervisor said.
The change announced by the finance ministry last week easedfears in the City of London financial district about new rulesdesigned to prevent the kind of reckless behaviour in thebanking sector that contributed to the financial crisis.
But the move also raised concerns among some Britishlawmakers that the government had succumbed to bank lobbying.
Andrew Bailey, a deputy governor of the Bank of England,said there had been a lot of "noise" around the now-ditchedreverse burden of proof rule, which would have required bankersto show they were not responsible for any rule breaches.
Regulators now have to show a rule was breached by a banker.
"This is not a watering down," Bailey told lawmakers inBritain's parliament.
Bailey, who heads the Bank's Prudential RegulationAuthority, said his worry was that if the rule had beenimplemented in its original form, it would have lead to a"tick-box" mentality within the industry.
He said the new Senior Managers Regime would still representa major strengthening of existing conduct rules when it isintroduced in March.
Bankers greeted the change last week with relief and lawyerssaid it sent a latest signal that a period of tough new rulesfor the sector was easing.
Finance minister George Osborne said in June that he wanteda "new settlement" with the financial sector and shortlyafterwards he removed Martin Wheatley as head of the FinancialConduct Authority who had taken a tough approach with banks. (Reporting by Huw Jones and David Milliken; editing by WilliamSchomberg)