The Treasury has launched an independent investigation into regulatory issues raised by the collapse of London Capital & Finance (LCF).
Commissioned by the Financial Conduct Authority (FCA), the investigation will be headed by Dame Elizabeth Gloster and will include a review of mini-bond rules.
The probe will look into the circumstances surrounding the collapse of the mini-bond firm, which left an estimated 11,600 investors facing their cash being wiped out. It will also assess whether changes may be required from the regulator.
FCA chair Charles Randell said the investigation 'will support the broader review of mini-bond regulation'.
'Dame Elizabeth Gloster brings independence and extensive experience to the task, and the FCA will ensure that she has all the access and support she needs to conclude her work as quickly as possible,' he said.
While mini-bonds are outside the scope of FCA regulation, LCF had aggressively advertised its products for sale via Sipp wrappers, which are regulated.
The FCA told the business to cease its marketing in late 2018, shortly before it was ordered to freeze its accounts.
Administrators to the business, which entered liquidation in January, said in March that they would likely only recover around 20% of its clients’ £237 million assets.
Earlier this month, the Financial Services Compensation Scheme (FSCS) said it would 'explore whether there are grounds for compensation' arising from regulated activities being carried out by the firm.
The FCA had announced in April that it had requested economic secretary to the Treasury John Glen MP to commission a review of the events leading up to the scandal.