The sources said the public consultation would suggest a merger of about a dozen trade associations. In addition to the BBA, it would include the Council of Mortgage Lenders, the Payments Council and the UK Cards Association, the sources said.

The BBA declined to comment.

The aim would be to create a more cost efficient and streamlined lobbying group. There was concern groups were duplicating efforts, such as when representing the UK cards or banking industry on European regulatory issues, sources said.

A 25-page outline paper has been sent to some banks and associations and more detailed consultations will take place this month.

The most radical option is to merge all the trade bodies under a coordinating council, which would then have sub-groups to deal with certain issues or business areas, such as cards.

A second option in the paper is to bring similar trade associations together. A third option is to maintain the status quo.

The groups and their members could appoint an external consultant to consider the options, one of the sources said.

Members of the trade bodies want to make savings as they focus on complying with costlier rules aimed at plugging regulatory gaps highlighted by the 2007-09 financial crisis.

"A merger would avoid some institutions having to be members of several trade bodies," one of the sources said.

The BBA is already having to rethink itself as some of its leading members, such as Royal Bank of Scotland (>> Royal Bank of Scotland Group plc) and Lloyds (>> Lloyds Banking Group PLC) undergo sweeping changes, such as becoming leaner and more domestically focussed, the sources said.

The BBA has also lost income after being stripped of its role in administering the London Interbank Offered Rate or Libor, an interest rate benchmark for which BBA members Barclays (>> Barclays PLC), RBS and Lloyds were fined for attempted manipulation.

Elsewhere in retail financial services, cards are facing a European Union cap on fees, and Britain has launched a new regulator with a remit to inject more competition into the banking payments system.

The UK Cards Association said it recognised the need to ensure the best value for members from industry representation and has taken part in recent discussions on collaboration between trade associations.

"Following the release of any proposals for change, we will study emerging thinking carefully and provide a response," a UK Cards Association spokesman said.

The Council of Mortgage Lenders and the Payments Council had no immediate comment.

Most financial law is made at the EU level and the bloc has in the past focussed on wholesale financial services, but will begin to give more attention to rule making in retail services.

Although the BBA also represents many investment banks, much of the lobbying for wholesale banking is conducted on a European basis, such as by the Association for Financial Markets in Europe or AFME.

(Additional reporting by Steve Slater; Editing by David Evans)

By Huw Jones