No 10 has been accused of having a “revolving door” after it refused to say whether the new Treasury minister Emma Reynolds would recuse herself from policy on China after she lobbied the government on the issue.

Reynolds, who worked as managing director for TheCityUK, a lobby group for banks and other financial services companies, had previously pressed the government to make China exempt from the strictest tier of rules on registration of foreign influence.

Reynolds replaced Tulip Siddiq as the City and anti-corruption minister. Siddiq had resigned on Tuesday over a furore about her use of properties linked to allies of her aunt, the ousted prime minister of Bangladesh.

Downing Street repeatedly refused to say whether Reynolds would recuse herself from future decisions involving the scheme, despite her previous work for financial services firms in relation to China.

Keir Starmer’s official spokesperson said the new City minister “brings a wealth of experience to the role”, adding: “When it comes to the process for the ministerial appointments, that will be followed in the usual way.”

Starmer said on Wednesday that he accepted Siddiq’s resignation “with sadness” and that it had been found that there was “no breach of the code” for ministers but said he wanted “to be clear that the door remains open for you going forward”.

“She knows that he found there was no wrongdoing, and the former minister fully cooperated. She referred herself a week ago on Monday; I got the report yesterday; and she resigned yesterday afternoon,” the prime minister said in the House of Commons.

“Compare that with the shadow foreign secretary [Priti Patel], who breached the ministerial code. The leader of the opposition’s predecessor but two ignored it. It was the adviser who then had to resign because he was not taken seriously … What a contrast. Thank God the British public chucked them out.”

Laurie Magnus, the adviser on ministerial standards, had said in a letter to the prime minister that there was no evidence of any wrongdoing by Siddiq but also highlighted that he did not have all the information and suggested she could have been more aware of the reputational risks of her association with her aunt, Sheikh Hasina.

Siddiq then resigned, saying that while she had not done anything wrong, she was concerned about being a distraction for the government.

It emerged on Wednesday that Siddiq has been put under a third investigation in Bangladesh, where her aunt’s government was ousted in an uprising over the summer. The director general of the country’s Anti-Corruption Commission, Akhtar Hossain, told Sky News that the commission was “preparing another investigation against Tulip Siddiq and her uncle Tarique Siddique for money laundering, power misuse, and illegally occupying Bangladesh government property”.

A spokesperson for Siddiq said: “No evidence has been presented for these allegations. Tulip Siddiq has not been contacted by anyone on the matter and totally denies the claims.”

Darren Jones, the chief secretary to the Treasury, defended the government’s handling of the issue, saying he would be happy to work with Siddiq again and rejected the idea that her appointment showed a lack of judgment from Starmer.

Since Siddiq’s departure on Tuesday, focus has switched to Reynolds and her role lobbying for financial services.

Prem Sikka, a Labour peer and professor of accountancy, wrote on X on Wednesday about “revolving doors” in the government.

“Tulip Siddiq resigns as UK Treasury minister after becoming embroiled in anti-corruption probe in Bangladesh. Replaced by Emma Reynolds, former director of TheCityUK which lobbies for the finance industry. Government is deregulating the City,” he said.

While Reynolds was at CityUK last year, the group also lobbied the then chancellor Jeremy Hunt to get the financial regulator to water down its new enforcement approach that would mean firms under investigation for wrongdoing could be named where it was in the public interest.

It describes itself as a “membership body lobbying on the industry’s behalf” and its website shows that Reynolds met the then shadow Treasury team, including Rachel Reeves and Tulip Siddiq, on multiple occasions while in her TheCityUK role.

Labour launched its plan for financial services at TheCityUK last year. Siddiq also posted on LinkedIn that she had “worked closely with TheCityUK and its members in recent years to formulate the Labour party’s policies for the financial and professional services sector, and a future Labour government will build on this important partnership”.

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