Andrew Bailey appointed as new boss of Financial Conduct Authority

Bailey comes from the Prudential Regulation Authority

Andrew Bailey, center, the new chief executive of the FCA, points to the exit next to the Chancellor of the Exchequer George Osborne and the Governor of the Bank of England Mervyn King during the opening of the PRA (Getty)

Andrew Bailey, the deputy governor of the Bank of England, has been picked as the new chief executive of City watchdog the Financial Conduct Authority.

Bailey comes from the Prudential Regulation Authority, which has oversight of 1700 banks, building societies, insurers and investment firms.

He previously served as chief cashier and private secretary to the governor during 30 years of service at the UK's central bank.

His surprise appointment ends speculation over the successor to Martin Wheatley, who was squeezed out by George Osborne in July 2015 for cracking down on banks with tough new regulation.

Tracey McDermott, former head of enforcement at the BofE, has been in the post in an interim capacity, but ruled herself out of the race earlier this year. Greg Medcraft, the head of Australia's securities regulator, was also thought to be a contender.

The Bank of England did not give a date for Bailey's departure, saying he would not leave the PRA before a replacement was found.

Governor Mark Carney described him as "an extraordinary public servant".

"His work in helping to manage the crisis and then to develop the post-crisis regulatory framework has been exemplary," he added.

Bailey, who currently sits on the FCA's board and worked at is predecessor the Financial Services Authority, said his appointment was "a great honour".

He continued: "Recent developments have shown that the most pressing issue in the system right now is the need for stable leadership at the FCA. After a lot of thought I have decided to move and do all that I can to make the FCA effective and successful."