People involved in the refurbishment of Grenfell Tower are facing possible charges of fraud and conspiracy to defraud, according to the chairman of the public inquiry into the disaster that claimed 72 lives.

Sir Martin Moore-Bick has told the attorney general, Geoffrey Cox, that during forthcoming hearings examining the marketing of the combustible cladding and insulation that spread the fire, witnesses are “very likely” to be asked to discuss issues involving potential fraud offences.

The inquiry had already heard that witnesses could face criminal prosecution under the Health and Safety at Work Act and in some cases could be charged with manslaughter or corporate manslaughter.

Moore-Bick revealed the possibility of fraud charges in an application to Cox for an undertaking that witnesses’ oral evidence would not be used against them in criminal proceedings.

“Any questions put to employees of the manufacturers or sellers of the cladding materials about how they came to market potentially dangerous products are likely to lead to their invoking the privilege against self-incrimination,” the retired appeal court judge said.

The inquiry was halted on 30 January when lawyers for the architects, the main contractor, facade contractor, fire engineer and landlord led a request to invoke a longstanding protection against self-incrimination.

The inquiry had already heard evidence that Arconic, the company that made the cladding panels, knew in 2015 that the material used on Grenfell was “dangerous on facades”. It also heard how in 2013, Celotex, which made the combustible insulation, was considering whether “our product realistically shouldn’t be used behind most cladding panels because in the event of a fire it would burn”.

The request for an undertaking that oral evidence at the public inquiry would not be used by police and prosecutors to try to send people to jail has upset many of the bereaved and survivors. They believe the companies and executives responsible for the disastrous refurbishment should give truthful evidence openly and without condition and face the consequences, even if it results in criminal prosecution. Others have remained neutral on the request, considering the undertaking the only way that witnesses will realistically give comprehensive evidence to the inquiry.

Moore-Bick told Cox he did not believe the undertaking would impede any criminal prosecution. “Given the vast volume of documentary evidence and witness statements already available to the police, any admissions or inconsistent statements, although a potential bonus, are unlikely to provide the foundation for a decision to prosecute,” he said.

He also urged Cox to make a decision “as a matter of urgency”, saying the evidence the inquiry team had uncovered “suggests that significant risks to public health and safety will continue to be created until the full extent of what happened at Grenfell Tower is brought to light”.

The inquiry is not expected to restart until 24 February at the earliest.