Brussels wants Britain to continue to stick with its financial rules in exchange for open trade across the Channel, and has refused to deem UK regulations ”equivalent” to its own even though both sides had identical systems when Brexit took place.
The new plan is still being developed, as the Bank has to work out a system for simplifying rules.
Ms Saporta said: “One approach would see us sitting down with the current rule book and, working through it pen in hand, striking or simplifying out those parts which aren’t needed for non-systemic banks and building societies.
“The other approach would have us starting with a blank page and identifying the minimum number of requirements needed to maintain small firms’ resilience.”
Officials also need to make sure the new system will not inadvertently stop small banks from growing by presenting them with a big regulatory hurdle once they reached a certain size.
The tentative first step is to begin by calling for responses to a new discussion paper, as officials consult on the right place to start the review, and on the form the new framework might take.
Ms Saporta said: “The realisation of this vision will take years of coordinated work.”
Emma Reynolds, of lobby group TheCityUK, said the plans point to the fundamental difference between the way Brussels operates and the way the City will be run in future.
She said: “Now we have left the EU, UK regulators are right to start thinking about how they can simplify rules, with a focus on proportionality and supporting competition.
“EU financial regulation is formulated as a one-size-fits-all framework, but the UK can now strive to be more nimble. While maintaining high standards, the approach should be tailored to the UK’s particular needs and objectives.”
David Postings, chief executive of banking lobby group UK Finance, said: “An efficient, innovative and competitive financial services industry is critical to the future growth and prosperity of the UK economy.
“Strong mid-tier and specialist firms make the banking system more resilient and provide competition and choice for customers.
“Although many new banks and non-bank competitors have entered the market, more could be done to improve the proportionality of regulation for these firms as they scale up and grow.”