Osborne picks Andrew Bailey as new FCA chief executive

Bailey, who has has been at the central bank for three decades is currently head of its other, less public-facing, regulatory arm, the Prudential Regulation Authority.

He will remain in post until his successor has been appointed, with the exact date of his departure to be confirmed in due course.

BoE Governor Mark Carney praised Bailey's work in helping to manage the financial crisis and developing the post-crisis regulatory framework.

"He has made the PRA a highly respected and effective regulator and built a team of exceptionally dedicated colleagues," Carney added.

After the removal of the FCA's last permanent chief executive, Martin Wheatley, who was seen as somewhat of a regulatory hardliner, the FCA has come under fire for taking a softer line on the City.

In December the City watchdog scrapped a review into the culture of behaviour in the banking industry, which has led to questions being asked by the Treasury select committee.

But Bailey is no soft touch, having overseen the introduction of tougher rules on capital for banks and insurers, new rules on banker remuneration and the introduction of concurrent stress testing for the major UK banks.

He has previously been executive director for banking services and chief cashier, head of the Bank's Special Resolution Unit, the Governor's private secretary and head of the International Economic Analysis division.

Bailey added: “Recent developments have shown that the most pressing issue in the system right now is the need for stable leadership at the FCA. Although it had not been my intention to leave the PRA during my term as CEO, a job that I enjoy enormously, it is a great honour to have been asked by the Chancellor to take on the job of FCA CEO."

In light of the allegations that the FCA has been vulnerable to political pressure, Treasury Committee chairman Andrew Tyrie said that whatever the substance of these allegations, the perception of them may remain to taint the FCA office.

“It is partly the need to address these concerns, and to entrench the FCA’s independence, that has led the Committee to conclude that it requires a veto on both the appointment and the dismissal of the FCA’s senior leadership," he said.

The Treasury also appointed four new non-executive members to the FCA board, to take effect from 1 April: Bradley Fried, a member of the Bank of England’s Court of Directors and former chief executive officer of Investec; Baroness (Sarah) Hogg, former head of the John Major's Prime Minister's Policy Unit and ex chairman of 3i; Ruth Kelly, former Secretary of State for Education; and Tom Wright, who is also a member of the FCA's Financial Advice Market Review expert panel and the Financial Capability Board.

They replace Sir Brian Pomeroy and Amanda Davidson will step down from the Board on 31 March 2016, and Mick McAteer who stood down on 31 December 2015.