LONDON The public face of Britain's banks during the financial crisis considered resigning several times over her members' fight against compensating customers mis-sold loan insurance.
The British Bankers' Association (BBA) mounted the challenge in 2011 against principles from the Financial Services Authority (FSA) on how lenders should contact customers about the mis-selling of payment protection insurance (PPI).
Angela Knight, CEO of the trade body at the time, said she had been against going to court, preferring faster ways of agreeing a common approach to compensation.
She was worried about political consequences if the BBA won, saying her unease was well known inside the UK trade body.
"I thought of leaving the BBA on a number of occasions before I did," Knight told a parliamentary commission on banking standards.
"Sometimes you will hold your nose and go through the lobby on the basis you can sort it out better than to say 'No, I am going elsewhere'," she told the panel of MPs.
The commission is expected to recommend legislative changes to help regain public trust in the UK banking sector.
Loan insurance mis-selling is Britain's biggest retail financial produce scandal, with banks such as HSBC, Barclays, Lloyds and RBS having set aside a total of 12 billion pounds to cover compensation.
Knight defended the banks during her five years at the helm of the BBA from April 2007, near the start of a financial crisis that triggered public anger over taxpayer bailouts of banks and the bonuses they paid top staff.
"It made it difficult to go to the pub for a drink or travel on a train as people recognised me," Knight said.
She left in July last year just after Barclays became the first bank to admit rigging the Libor interbank benchmark interest rate. A second British bank, RBS, could settle similar charges in coming weeks.
"I did not know it was coming. I only knew when it had arrived. I had no idea it was going to land," she said of the Barclays settlement.
Libor is overseen by the BBA, which is being stripped of this role as part of a review of how it is compiled.
Knight had "no inkling whatsoever" that traders at different banks were contacting each other to rig Libor. "I was absolutely appalled that was the case," she said.
MPs challenged her for not barring BBA members for bringing the industry into disrepute, given the PPI and Libor scandals.
Knight said she had made "very pointed points" to some bankers and asked for some people to be changed, but had decided not to go public on this.
Speaking at the same hearing, Peter Vicary-Smith, head of UK consumer lobby Which?, said the FSA had been slow to tackle mis-selling and was too close to the industry at that time, though this had changed.
Some banks were still "obfuscating" over compensation, Vicary-Smith said, though he singled out changes at Barclays as "impressive".
Mis-selling of products would only end when they were better designed, with inappropriately high margins stopped and curbs slapped on high-pressure sales tactics and bonuses, he added.
Knight agreed there had been a "detachment from customers" at some banks, but as the financial crisis unfolded the top priority for some lenders was survival.
The FSA is changing how products can be sold and from April its successor body can ban products that harm consumers.
(Editing by David Holmes)