Labour MP John Mann challenged Chancellor George Osborne over his decision not to renew the contract of Financial Conduct Authority (FCA) chief Martin Wheatley at a Treasury Committee (TC) hearing on Tuesday.

Last week, the FCA announced that Wheatley – who has been in charge of the regulator since its inception in 2013 – is to stand down from his role, effective 12 September 2015.

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During the hearing, Mann said that Wheatley had been ‘sacked’ by the Chancellor, and asked: "In your Mansion House speech you echoed (former Barclays boss) Bob Diamond’s call for an end to "banker bashing" and then sneaked through the sacking of Martin Wheatley, the regulator. Did you talk to the banks before sacking Mr Wheatley?"

Osborne emphasized that he had not ‘sacked’ Wheatley and said the FCA’s chief had done a good job.

‘First of all, I chose not to renew Mr Wheatley’s contract so I don’t accept the way you describe it, and I think he did a very good job in difficult circumstances, with the creation of this new consumer regulator,’ Osborne said.

He added: ‘I don’t accept of course the way you describe our relationship with the banking industry, we’ve introduced tough new regulation, introduced a new tough new banking tax…and indeed thanks to the work (TC chair) Mr Tyrie did on the banking standards commission of this house, made sure that there is now a tough code of conduct for people in the financial services sector – all of course a massive difference from the situation we inherited.’

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In addition, Osborne said that new leadership could strengthen the FCA.

‘But for the FCA going forward, my judgement is that we can find new leadership to strengthen that institution so it is a powerful consumer champion,’ Osborne said.