The former Tory MP Mark Menzies is quitting parliament after allegations that he misused campaign funds.

The MP for Fylde announced that he would not stand at the next election after the allegations were referred to Lancashire police.

The Conservative party said that an internal investigation could not conclude there had been a misuse of party funds. However, it said that Menzies had demonstrated a “pattern of behaviour” that fell below the standards expected of MP.

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The Fylde MP resigned the Conservative whip and was suspended as a government trade envoy after the Times published allegations he had used political donations to cover medical expenses and pay off “bad people” who had locked him in a flat and demanded thousands of pounds for his release. He denied the allegations.

Menzies’ former campaign manager, who allegedly received a late-night phone call from him asking for cash, has said she felt “let down” by the party after she raised concerns with the chief whip, Simon Hart, in January.

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

“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.