Misconduct allegations surrounding foreign exchange trading are as bad as the Libor rate-rigging scandal, the head of the City regulator told MPs.

At least 10 banks have been drawn into a major investigation, launched last autumn by the Financial Conduct Authority (FCA), the Treasury Select Committee was told yesterday.

FCA chief executive Martin Wheatley also said it was investigating a range of benchmark rates operating in London.

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Banks have been fined billions of pounds by regulators in the UK, Europe and the US for trying to fix such rates, including Libor, and Barclays chief executive Bob Diamond quit after the scandal emerged in 2012.

Criminal action has also been launched by the Serious Fraud Office.

Last October, the FCA said it had joined other international regulators in scrutinising firms over potential manipulation of the £3 trillion a day forex market. Mr Wheatley said: "The allegations are every bit as bad as they have been with Libor." He said there was a lack of trust in the way rates were fixed, though the FCA was introducing new standards.

Mr Wheatley said 10 banks had come forward with information in the light of the forex probe, though the regulator itself had not named those involved.

He said further investigations had not been made public, but told MPs: "There are a number of other benchmarks that operate in London that we are investigating because of concerns being raised with us."

Benchmark rates are used for loans and transactions around the world and are calculated using submissions from panels of banks about the rates at which they believe they can borrow.