Lord Turner has close links to the Labour govenrment
The former director-general of the CBI, Adair Turner, has been named as the new chairman of the City's watchdog, the Financial Services Authority (FSA).
Lord Turner will begin a five-year tenure when Sir Callum McCarthy steps down in September.
Observers say his key role will be to rebuild the tarnished image of the FSA.
The watchdog was accused by MPs of not doing enough as the credit squeeze took hold, especially over its supervision of Northern Rock.
The beleaguered Newcastle-based firm experienced the UK's first bank run in more than a century and was eventually nationalised.
An internal FSA report said that it had learned some "painful lessons" from its handling of the affair.
Lord Turner is a director at several firms, including Standard Chartered, as well as head of the government's committee on climate change.
He also oversaw the government's Pensions Commission between 2003 and 2006, and the Low Pay Commission between 2002 and 2006.
Chancellor Alistair Darling said that his "wide-ranging expertise" would "be invaluable in driving forward the FSA's objectives to maintain confidence in the financial system, promote public understanding of it, protect consumers and reduce financial crime".
Lord Turner said he looked forward to leading the FSA "as it meets the challenges ahead".