Sir James Sassoon is expected to be given a ministerial role driving reform in the City and to be appointed to the House of Lords as a key Government spokesman.
Sir James joined the Treasury full-time in 2002 but quit in 2008, before the banking crisis.
After leaving the Treasury in 2008, he produced a report for the Conservatives on banking reform that advocated, among other measures, the proposal to scrap the FSA and move macro-prudential regulation to the Bank of England.
Since forming a coalition Government with the LibDems, the Tories are widely expected to drop their plans to scrap the FSA, which was not part of the published coalition agreement.
Friends Provident senior manager of corporate communications Ashley Taylor says: “Sassoon has a lot of experience in the field. I think he would be very influential and valuable because of his City experience.”