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A confidential letter, seen by Financial Adviser, from Angela Knight, chief executive of the BBA, to Victoria Raffe in the FSA's strategy and risk division, claims there will be "unnintended consequences" to the proposals outlined in May's FSA DP 08/3 paper Transparency as a Regulatory Tool.

The regulator's 84-page consultation document stated: "We propose publishing information from the returns that firms provide to us.

"This would include information about overall trends in complaint-handling on an industry-wide level and, more importantly, we propose publishing information about the performance of individual firms."

However, the BBA response expressed "strong reservations" about the plans and accused the regulator of having "pre-judged some of the issues in this discussion paper in favour of increasing transparency".

Ms Knight wrote: "We are concerned that some of the proposals run significant risks of unintended consequences. For the most part the industry and the FSA enjoy an open and constructive dialogue.

"Supervisory teams at the FSA provide a great deal of helpful feedback to individual firms and indeed the FSA has recognised the need to enhance the capability of its staff to do this as effectively as possible.

"Similarly, the flow of information provided to the FSA by the industry on a voluntary basis is a demonstration of this.

"However, owing to the proposals within FSA DP 08/3, there is significant concern as to whether specific voluntary information might be publicly disclosed at a later date."

She also questions the plans' legitimacy under EU law, adding: "We have undertaken a review of the relevant EU directives and the evidence would suggest that the approach taken under these directives would prevent the FSA from publishing firm specific data in the manner outlined in the discussion paper."

However, Ms Knight she added the BBA "supports regulatory transparency in principle" as well as "the FSA's objective of stimulating competition in financial services by increasing customers' financial awareness, capabilty and confidence".

Adam Richards-Gray regulatory services spokesman for the FSA, said the watchdog had expected "strong and often polarised views" from "a range of stakeholders".

He said: "It is a consultation paper. We put forward our proposals and obviously stakeholders will come back to us on them and we will take that into account when we decide what to do next. We will be providing general feedback on the responses we have received, although we are not sure when."

However, he defended the regulator's line on transparency, adding: "We published this paper because we believe that saying more about firms generally could help us with our regulatory obligations and the fairness and promptness of how issues are dealt with."

The BBA declined to comment on the correspondence.