View from City Road: Touche should test the regulators

The lawsuit by Touche Ross against the Bank of England comes at a convenient time, just ahead of a creditors' meeting at Wembley on Thursday at which the liquidators will have to justify their own large bills to angry creditors.

If the case comes to court, it will test the responsibility of regulators in cases of gross frauds that happen under their noses, and define the limits of the Bank's immunity when it is operating under the 1987 Banking Act.

The report on the Bank's supervision of BCCI by Lord Justice Bingham built a picture of failures of supervision over many years which cumulatively caused a disaster, but it did not say there was gross negligence. Touche will have to prove there was.

The Bank is no stranger to lawsuits, having taken pounds 25m off Arthur Young in a settlement over the Johnson Matthey Bankers audit (driving the firm into a merger soon after). Touche would be failing the BCCI creditors if it did not have a go.