LONDON (Bloomberg) — The UK government risks fumbling its response to the run on Northern Rock Plc and should take more time when drafting rules to prevent a reoccurrence, said Richard Lambert, head of the Confederation of British Industry.

"Don't rush things," Lambert, director general of the country's biggest business lobby and a former Bank of England policy maker, said in a speech in London. "The US responded to the collapse of Enron with the Sarbanes-Oxley legislation, with seriously damaging consequences for the American corporate sector. We could be about to make the same mistake."

Prime Minister Gordon Brown's government in January put forward plans for a "special resolution regime" to limit the impact of a banking crisis on the rest of the economy after the first run on a UK bank in more than a century.

The proposals give the Treasury powers similar to those of US regulators to appoint an administrator and a "bridge bank" to handle the assets of financial institutions in danger of bankruptcy.

The government's plans are flawed because they fail to specify the competencies of the Treasury, the Bank of England and the Financial Services Authority in specific situations, Lambert said. For example, the government doesn't say which authority decides when a bank should be put under a special resolution regime, he said.

Lambert said the impact of the proposals on the UK's financial system could be similar to that of the Sarbanes-Oxley rules, passed in 2002. They require officials to attest to the accuracy of financial reports and have been criticised for hurting the competitiveness of the US banking industry.

"It is possible to give broad approval to the authorities' overall sense of direction, while feeling uneasy about a great deal of the detail," he said.