The Obama administration's plan to give US states more power to protect consumers from unfair banking practices would make it more difficult and costly for large lenders to operate across the country, a financial regulator has warned.

John Dugan, who oversees national banks as comptroller of the currency, told the Financial Times that the proposals to create a federal consumer protection agency and give states more leeway to crack down on unfair practices would have negative “ramifications for companies operating across state lines”.

Mr Dugan, who faces the loss of some of his powers if the plan is implemented, argued that repealing the 145-year-old system that gives federal banking rules precedence over state laws would confuse banks and discourage them from offering consumer products across the country.