LONDON, Oct 20 (Reuters) - A decision by British finance minister George Osborne to scrap "guilty-until-proven-innocent" rules for bankers in Britain will help avoid legal uncertainties and does not represent a watering down of the reform, Britain's top banking supervisor said.
The change announced by the finance ministry last week eased fears in the City of London financial district about new rules designed to prevent the kind of reckless behaviour in the banking sector that contributed to the financial crisis.
But the move also raised concerns among some British lawmakers 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-ditched reverse burden of proof rule, which would have required bankers to 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 in Britain's parliament.
Bailey, who heads the Bank's Prudential Regulation Authority, said his worry was that if the rule had been implemented 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 represent a major strengthening of existing conduct rules when it is introduced in March.
Bankers greeted the change last week with relief and lawyers said it sent a latest signal that a period of tough new rules for the sector was easing.
Finance minister George Osborne said in June that he wanted a "new settlement" with the financial sector and shortly afterwards he removed Martin Wheatley as head of the Financial Conduct Authority who had taken a tough approach with banks. (Reporting by Huw Jones and David Milliken; editing by William Schomberg)