McDermott will take up the role on 20 March and will also join Standard Chartered’s global management team.
She will work closely with group chief executive Bill Winters and group chairman José Viñals in strengthening the group’s core regulatory relationships.
McDermott will also work with group chief risk officer Mark Smith on managing the group’s reputational risk.
Steve Atkinson, currently group head of corporate affairs, will take up a new role as Winters’ chief of staff as soon as McDermott joins the team in March.
McDermott was the acting chief executive of the FCA from September 2015 until July 2016. She replaced Martin Wheatley who stood down in September 2015 but later indicated that she would not seek to fill the role on a permanent basis.
Prior to her role as acting chief executive she held a number of senior positions at the FCA with responsibility for the conduct regulation of the UK’s financial services sector, including director, supervision and authorisations, and director, enforcement and financial crime, and was also a member of the board of the FCA from April 2013.
She was a member of the Financial Policy Committee of the Bank of England, and a non-executive director of the PRA from September 2015 until June 2016.
Commenting on her new role, McDermott said, "Standard Chartered operates in some of the most exciting and dynamic markets in the world.
"The opportunity to join the bank at this critical point in its history, and in a time of global change, is one which was too good to miss. I am looking forward to working with Bill and the team to help continue the group’s transformation."
Winters added, “Tracey has played a critical role in shaping and changing behaviours in the UK financial sector. Her strong leadership skills, together with a combined experience of bank supervision, regulation and policy development is outstanding, and she will play a critical role in further enhancing our relationships with regulators and policy makers. Tracey is a great addition to our management team.”