He will take over on June 2 from John Howard, who chaired the panel from October 2005 to March this year.
Lipsey, whose background is in journalism, financial services and regulation, has been an active member of the House of Lords. As a condition of his appointment to the panel, he is resigning the Labour whip in the Lords.
He was a PIA director and leader of the regulator’s pension review committee.
Speaking at a Social Market Foundation/Provident Financial event at last year’s Labour party conference in Bournemouth, Lipsey said: “A lot of people had been sold pensions perfectly validly and they had either forgotten what had happened or they remembered but knew it was in their interests to forget what had happened to them.”
As a result of his comments, head of the Financial Ombudsman Service review Lord Hunt said he would be writing to Lipsey to ask him to provide evidence to the FOS review.
Speaking about his appointment, Lipsey says: “I am delighted to be taking on this role at a crucial time for the financial services industry.
“I hope to raise the profile of the panel a notch or two, so it can be even more effective in future in advancing the consumer interest.”
Informed Choice director Martin Bamford says: “He has been controversial in the past. It does not hurt to throw a little bit of that in the mix to wake people up.”