The cancellation of The Jeremy Kyle Show has left ITV in the middle of one of the biggest British broadcasting scandals in recent years, with the company facing a parliamentary inquiry into the treatment of reality TV guests and the risk of the issue damaging next month’s return of the highly profitable Love Island franchise.

It also raises questions about the extent to which a broadcaster can be held responsible for the actions of individuals who voluntarily choose to appear on programmes. ITV insiders and those at other production companies are now pondering whether it is possible to create the drama necessary for compelling reality TV without damaging the individuals who provide the raw material.

Reality programmes broadly fall into three categories: heavily produced “scripted reality” episodic series such as Made In Chelsea, shows such as Love Island where carefully selected fame-seeking contestants subject themselves to sustained scrutiny over a short period, and long-running daytime programmes such as Jeremy Kyle which expose the real-life personal problems of guests.

TV producers and analysts agree that shows in the final category, which flourished in the 1990s and 2000s, now pose the biggest risk to broadcasters’ reputations.

“Jeremy Kyle is a very different format to many reality formats,” said Gill Hind of media analysts Enders Analysis. “The people on there have already some difficulties in life which is very different to someone going on Big Brother.”

The chain of events which led to the show’s cancellation began when Steve Dymond recorded his appearance on the programme two weeks ago. The 63-year-old was left distraught after failing a lie detector test over claims he had been unfaithful to his fiancee. Although production staff believed the couple had calmed down by the time they departed in a taxi, they split up and he was found dead days later.

News took time to filter through to ITV headquarters, with his death only confirmed on Sunday afternoon – at which point executives decided to suspend production of the programme to “protect the show” and the staff who work on it.

Late on Tuesday night, following growing calls for the show to be cancelled and an intervention from Downing Street, leading ITV staff including chief executive Carolyn McCall, head of television Kevin Lygo and daytime boss Julian Bellamy collectively agreed the show could not be saved.

Kyle issued his first comment on the case last night, telling the Sun he and his team were “utterly devastated by the recent events”, adding: “Our thoughts and sympathies are with Steve’s family at this incredibly sad time.”

Media regulator Ofcom has demanded an initial report from ITV on the circumstances surrounding Dymond’s participation on the cancelled show by next Monday.

The Jeremy Kyle Show was in some ways a relic from a previous era of reality TV. Its 9.25am broadcast slot sat uneasily between the chatshows Lorraine and This Morning in the ITV morning lineup, with the Kyle’s brutal morality judgements providing a stark contrast with two programmes which specialise in soft interviews on a sofa and human interest chat.

A former runner on the programme told the Guardian they quit the show after becoming uncomfortable with how it treated guests: “People would come in quite excited to be on the show but they were quite vulnerable. They felt this was their only option because they were told that a lie detector test that cost £700 would be free – and they’d get food and cigarettes and a free night’s hotel.”

Politicians have linked Dymond’s death to the suicides of Sophie Gradon, 32, and Mike Thalassitis, 26, two former contestants on Love Island – the annual cash cow which has enabled ITV to boast of its ability to attract hard-to-reach young viewers. But their deaths occurred some time after filming completed, in some cases after they had appeared on other reality programmes or struggled with social media infamy.

“Once someone leaves Love Island the pressure on them is from other media,” said one person with knowledge of the programme’s after-care arrangements. “With Kyle it is much more about what happens on air.”

ITV has publicly grappled with the issue of what support it should offer Love Island contestants and is now planning to offer support for more than a year after they appear on the programme. But McCall has previously said there are limits to what a broadcaster can do: “We can do everything we possibly can to look after people and to do our duty of care but you can’t do that for ever with an individual … It can’t be indefinite.”

Around 60 staff worked on Kyle’s show, which was produced in-house by ITV Studios in Salford. Many were reported to be in tears on Wednesday when it was confirmed that the programme was being canned. ITV is now seeking to redeploy team members – some of whom also work on the fake court show Judge Rinder – to other programmes in order to secure their jobs.

The scandal came at a bad time for ITV, whose share price has slid in recent months. Rival TV producers suggest the show – made in-house by ITV Studios – would have cost around £75,000-£100,000 an episode to make, with the company facing a potential hit of more than £10m as a result of winding down production in Salford.

Despite its consistent ratings performance, some of ITV’s top team have not been enamoured of the show for a while. “The mood at ITV was it was time for it to go,” said one source.

After running for 15 years and producing more than 3,000 episodes, the show has now been wiped from the internet. Its YouTube archive featuring more than 10,000 clips has been deleted, while its Facebook page with over 1.3m followers has vanished, along with its Twitter account.

Yet Kyle himself is still set to work at ITV, unless anything is unearthed during the ongoing review ITV is conducting into the episode. His current affairs show The Kyle Files is still available on ITV’s catch-up service ITV Hub. Kyle may also stand in again for Piers Morgan on Good Morning Britain, as he has done so before. Some sources suggest he is considering moving into politics – a transition made by another former ITV daytime host, Robert Kilroy-Silk.