An MP facing allegations of misusing campaign funds has quit the Conservative Party and says he won’t stand at the next general election.

Claims surfaced earlier this week in The Times that Mark Menzies had used political donations to cover medical expenses and pay off “bad people” who had reportedly locked him in a flat and demanded thousands of pounds for his release.

The backbench MP for Fylde in Lancashire disputed the allegations but was suspended from the Conservative parliamentary party while an investigation took place.

In a statement, Mr Menzies said: “It has been an enormous privilege representing the people of Fylde since 2010, but due to the pressures on myself and my elderly mother, I have decided to resign from the Conservative Party and will not stand at the forthcoming general election.

“This has been a very difficult week for me and I request that my family’s privacy is respected.”

Lancashire Police said it was reviewing “information” about Mr Menzies after Labour asked for an investigation.

Speaking to Sky News’ Electoral Dysfunction podcast, former Scottish Tory leader Ruth Davidson had called the latest scandal and allegations against Mr Menzies “jaw-dropping”.

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The claims surrounding Mr Menzies came to light after the outgoing MP’s former campaign manager, Katie Fieldhouse, spoke to the Times, prompting the Conservative Party to launch its own internal investigation into whether there had been a misuses of its funds.

She claimed the Conservative Party was aware the allegations about Mr Menzies were potentially criminal, alleging that the party’s chief of staff “told me that when they first took over the investigation [from the Whips’ Office] they had consulted solicitors”.

She added: “He told me on the phone, ‘the solicitor said it is fraud but you are not duty-bound to report it because it’s not Conservative Party money’.”

On Sunday a Conservative Party spokesperson said its investigation was now complete and had found there had not been a misuse of funds – but that it had identified a “pattern of behaviour that falls below the standards expected of MPs”.

“The money in question that was sent to Mark Menzies MP was signed off by the two signatories of Fylde Westminster Group,” the spokesperson said.

“This body sits outside of the remit of both the Conservative Party and Fylde Conservative Association. Therefore we cannot conclude that there has been a misuse of Conservative Party funds.

“However, we do believe that there has been a pattern of behaviour that falls below the standards expected of MPs and individuals looking after donations to local campaign funds which lie outside the direct jurisdiction of the Conservative Party.

“We will therefore be commencing with retraining individuals across the party on how to manage these accounts which fall outside of the remit of the Conservative Party and are introducing a whistleblowing helpline.”

They continued: “Furthermore, whilst outside of the initial scope of this investigation, there has also been a recommendation that the actions of the MP in question have also potentially breached the Nolan principals of public life.”

“This is due to the nature of the allegations made, but also the repetitive nature of these separate allegations. These will be reviewed by the Conservative Party’s member governance team.

“We will of course share any information with the police if they believe it would be helpful to any investigation they decide to undertake.

“Suggestions the party has not been seriously examining this matter are demonstrably false as we have worked to protect the identities of all those involved whilst the facts could be established.”