The banks are concerned that the European Data Protection Directive, which comes fully into force next month, will impose heavy burdens on companies with offices outside Europe.
One of the directive's aims is to ensure that European citizens have the same rights of privacy, whether personal data is processed within the EU or in countries with lower standards.
The commission plans to enforce the directive by asking organisations to sign contracts guaranteeing they will comply with minimum data protection standards.
But the banks are concerned that they, and other multinational companies, may be forced to sign large numbers of contracts.
"We think it would be a major administrative burden for no good reason, particularly when our members comply with high standards already," said Peter Beales, director of the London Investment Banking Association.
The banks are particularly concerned that the directive gives no mechanism for multinational companies to transfer data between companies within their own organisation.
"If you are a bank in London, it's not clear how you can transfer data to your office in Geneva because you can't have a contract with yourself," said Beales.
The association, together with the CBI, is drafting a model group policy that could be used as an alternative to signing multiple contracts.
It lays down standards for how data is kept, and aims to ensure that it is used for appropriate purposes, and corrected if it contains inaccuracies.
If the policy is approved by the EC, the banks and other multinational companies will be able to use it to sanction data transfers between all the companies in a group, irrespective of their location.
"As far as we know, this is the first document of its sort," said Beales.
The London Investment Banking Association is seeking a meeting with the commission next month in an attempt to win approval for the draft policy.