"There is a risk that the current proposals will increase costs for bank customers and conflict with other rules that seek to make banks safer," said Simon Hills, a director at the British Bankers' Association (BBA).

The Bank of England (BoE) has proposed changes to the framework for the leverage ratio - which is a measure of equity as a percentage of assets, without adjusting for riskiness.

The proposals put forward are expected to result in Britain lifting the minimum leverage ratio for banks in the future, possibly to 4 or 5 percent, bank industry sources told Reuters last week.

Banks currently need to have a leverage ratio of at least 3 percent, in line with the global standard.

The BoE's Financial Policy Committee (FPC) is due to reveal changes to the leverage ratio framework in November, and gave banks until Friday to respond.

The FPC will not set a new minimum level for the leverage ratio in that review and has not said when it will. Industry sources told Reuters that could happen around mid-2015.

"We believe that they (the proposals) are too complex and potentially damaging," Hills said.

The BBA's response to the consultation, a copy of which has been seen by Reuters, said the plans for change go too far and would undermine the leverage ratio's simplicity, which is regarded as one of its attractions.

They would also "lead to much higher minimum levels of the leverage ratio than we had previously envisaged, resulting in banks having to raise yet more capital and to reconsider their business models and customer propositions," the BBA said.

Banks could restrain their dividend payouts to help improve their leverage, but are not expected to raise equity as long as they are given several years to meet the new rules, analysts have said.

The BBA's response echoes criticism of the proposals made by Britain's Building Societies Association (BSA).

The BSA said the proposals were a "primitive approach" that discriminated against them, as low-risk residential mortgages make up the bulk of their loan books.

(Reporting by Steve Slater; Editing by Mark Potter)

By Steve Slater