Felix Hufeld, the head of Germany's financial watchdog BaFin, is being replaced as the fallout from the Wirecard fraud scandal continues to grow.

Finance Minister Olaf Scholz announced the move on Friday, saying it was part of an effort to overhaul the agency.

"The Wirecard scandal revealed that the German financial regulator needs a reorganization to fulfill its supervisory role more effectively," a ministry statement said. 

Scholz thanked Hufeld for his years of service, adding that the personnel shakeup was a "new start" for the regulator.

The ministry statement did not identify Hufeld's successor.

The news comes after BaFin announced that one of its own employees was suspected of insider trading connected to Wirecard's collapse.

Regulator under fire

Digital payments company Wirecard was a rising star in the fintech sector before ending up to be one of Germany's biggest fraud scandals.

In June last year, the company admitted that €1.9 billion ($2.1 billion) of its assets were unaccounted for. The firm filed for insolvency.

Preliminary investigations show that the company may have been cooking its books as early as 2015.

BaFin has come under immense pressure over the scandal, with regulators accused of poor oversight and missing warning signs that permitted the accounting fraud to continue for years.

A parliamentary committee has been tasked with finding out who knew what and when. Chancellor Angela Merkel and Finance Minister Scholz are set to be grilled by lawmakers as part of the inquiry.

rs/sms (AFP, dpa, Reuters)