The Financial Conduct Authority (FCA) chief executive Nikhil Rathi said the "fit and proper" test formed part of an investigation into Odey Asset Management (OAM) and its founder, which began in 2021.

Mr Rathi used a letter to the Treasury select committee of MPs, ahead of a parliamentary hearing later this month, to confirm the FCA was also exploring allegations Mr Odey breached integrity rules in dismissing the firm's executive committee in 2021 for "an improper purpose".

The watchdog is also looking at whether Mr Odey "failed to comply with the FCA's conduct rules relating to integrity and acting with due skill, care and diligence", Mr Rathi confirmed.

The FCA boss said its contact with the police related to allegations that were "potentially criminal in nature".

The letter was made public as the fund manager strenuously denies claims, made last month by the Financial Times and Tortoise Media, of historic sexual misconduct.

They reported a string of complaints by 13 women dating back over 25 years.

Mr Odey, who was cleared in 2021 of sexually assaulting a female banker in 1998, was ousted from his roles at OAM after the media allegations came to light.

The hedge fund has since been battling to contain the fallout from the crisis, which included a deposit flight by customers, asset sales and a number of its funds being offloaded to rivals in a bid to shore up the business.

Mr Rathi said in the letter that the FCA's supervision of OAM had been "intensive".

Its "fit and proper" test is centred on issues such a person's ability to do a job honestly and to protect consumers, although it also considers factors such as past criminal and civil proceedings.

Individuals can be banned from working in the financial services industry if the FCA considers they are not "fit and proper".