A global investigation into possible manipulation of the vast foreign exchange market is proving to be as serious as the Libor probe, which has already seen banks pay more than $6bn in fines, the head of the UK’s financial watchdog said on Tuesday.

Martin Wheatley, chief executive of the Financial Conduct Authority, told a parliamentary committee that allegations of traders colluding to rig prices in the $5.3tn spot market were “every bit as bad as they have been with Libor”, adding that it was “a surprise to all of us” that they had become so serious.

His comments underline the continuing risks to banks’ reputations and finances as regulators around the world step up their scrutiny of benchmarks after uncovering a widespread industry practice of rigging Libor interbank lending rates.