The interim boss of the City watchdog has warned that it would be "very, very easy" for Britain's biggest banks to stop caring about standards of conduct and behaviour.
"It would be very, very easy for change to be reversed," Financial Conduct Authority (FCA) acting chief executive Tracey McDermott said in an interview with the Sunday Times over the weekend. "The concern is that banks will stop caring and begin to turn a blind eye to bad behaviour."
But Osborne revealed in January that McDermott had not been shortlisted for the permanent job because she "doesn't want the job full-time".
Speaking on Radio 4's Today programme, Osborne said McDermott had been a "very effective interim leader", but that the FCA "needs new leadership to take it into its more mature phase".
McDermott later confirmed that she had taken her name out of the running to be the regulator's permanent boss in early December.
McDermott said this weekend that despite more than 15 years of regulatory experience – she joined the Financial Services Authority (FSA) in 2001 – she did not think she was ready to take on the role permanently.
"It is an incredibly intense, public job that covers a huge range of activities," McDermott told the Sunday Times. "I’ll be very female here and say I think I was doing an okay job as chief executive, but it requires 100 per cent commitment."
Osborne revealed in late January that he had appointed Bank of England deputy governor and chief executive of the Prudential Regulation Authority (PRA) Andrew Bailey to the top job at the FCA.
Bailey is expected to take over from McDermott later this year, after the Treasury has appointed his successor at the PRA.