The U.K. Treasury announced the launch of an independent investigation into London Capital & Finance PLC.

The commercial lender went into administration with £236 million in losses from investments in so-called mini-bonds — unlisted debt securities usually issued by small businesses to raise funds that do not necessarily involve regulated processes.

Elizabeth Gloster, a former High Court and Court of Appeal judge, will lead the probe into LCF's collapse and the Financial Conduct Authority's supervision of the firm, and will determine whether the regulator fulfilled its statutory objectives with respect to LCF, the Treasury said in a May 23 statement.

The Treasury will also start a wider policy review of the regulatory regime for mini-bonds and other non-transferrable securities, and will also consider the regulatory arrangements currently in place for these types of investments, including the Financial Promotions regime which governs the marketing of such products.

In a same-day statement, FCA Chair Charles Randell said the review will help establish the circumstances surrounding LCF's failure, determine whether further changes are required and support the broader review of minibond regulation.

The Economic Secretary to the Treasury, John Glen, said in a separate statement that the probe is expected to run for 12 months. Nicky Morgan, chair of the Parliament's Treasury Select Committee, criticized the time frame of its conclusion, and has called on the FCA, the Treasury and Gloster to "think innovatively about how the investigation can report quickly," the Financial Times reported.

The FCA, which will commission the inquiry, will report the findings of the investigation to the Treasury following its conclusion.