The Swiss government’s attempt to reach a landmark legal resolution of the country’s bitter tax dispute with the US has failed, after the lower house of the Swiss parliament voted down the government’s bill for a second time.

The bill would have allowed Swiss banks to circumvent strict bank secrecy laws and hand over business records to American authorities, paving the way for them to agree individual settlements for their role in helping wealthy Americans evade taxes.

The rejection raises the possibility that the US will take further action against Swiss banks – an outcome the Swiss government and financial sector are desperate to avoid. The US authorities have already claimed one scalp, after Wegelin, Switzerland’s oldest bank, had to close after it was indicted last year for helping Americans evade taxes.