It seems you are torn between staying in this current situation or moving on. Your current teacher gives you some sense of stability, however you have raised several doubts. Moving on poses the challenge of searching for a new teacher.
Do you really want to continue with this teacher if you sense the tendency will be towards shaky ground? He may be good, but do you work well together? His knowledge will not serve you well if the student-teacher relationship is not sound. In such case you will end up distracted by uncertainty rather than focusing on the music.
The search for a teacher is a daunting one, but patience will eventually bear fruit. I studied with many teachers before I found someone I could truly work and develop with.
If this is someone who you think may not turn out to be the best teacher for you, than move on. It will take several lessons before you get a sense of your teachers working habits and if they work with you. Doesn't matter how many people have recommended this teacher, if you can't work with him than it is better to seek someone else.
But even before he heard me play - he knew what grade i was and that I had a scholarship - he asked us to buy a new grand...
This seems questionable to me. A persons ability at the instrument is not as clearly delineated as grading systems dictate. How does a teacher give an accurate opinion of a persons playing ability without first hearing the student play (or at the very least listen to a recording)?