The banker, who is reckoned as one of the designer of modern investment banking after a thirty long year career at Goldman Sachs, SG Warburg of Deutsche Bank, has been given the appointment as one of four external members of the powerful Committee by the Treasury.

The other members comprise former vice-chairman of America's Federal Reserve, Donald Kohn, Sir Richard Lambert, who has just stepped down as director general of the CBI; and Alastair Clark, a long serving adviser nick-named "Mr. Financial Stability".

The four members are possibly to become permanent members when the FPC status is approved by Parliament in 2012. The Committee will be part of the Bank of England and chaired by the Governor, Mervyn King. It forms the central plank of the new regulatory body, details of which were disclosed yesterday.

As part of a consultation on it plans for drastic regulatory change, the Treasury etched out proposals to provide even more powers to the new regulators, which will be formed by breaking up the Financial Services Authority (FSA).

The plans have caused alarm in the City that the Government could go too far in trying to abolish London's reputation for having regulation that is not very strict.

George Osborne made a statement saying that the FPC will not be able to take any action which might have a considerable amount of adverse effect on the capacity of the financial sector to contribute to the growth of the U. K. economy.

The Government has said that the Consumer Protection & Markets Authority has been re-named before it has even started. It will be called the Financial Conduct Authority and have extra powers to ban return products and warn investors about it intention to penalize bankers, brokers and individuals, before any rulings have been made.