Bailey, who has been appointed for a five year term, is expected to take up his new role in July 2016.
Chancellor George Osborne on Tuesday said: “Andrew Bailey is an outstanding candidate to be the next chief executive of the FCA.
“He has already done a superb job at the PRA; where he has shown how effective he is as a leader, able to build strong relationships and use his fine judgment to steer the PRA through its formative years.”
Filling the role of FCA chief executive proved to be more problematic than most expected, with several high profile candidates making themselves unavailable for the role.
Bailey replaces interim chief executive Tracey McDermott, who stepped in to fill the breach after Martin Wheatley resigned in mid-July after the chancellor advised him that his contract would not be renewed.