The Serious Fraud Office is expected to be asked to investigate the collapse of Equitable Life once the inquiry, led by Lord Penrose, is completed.
Lord Penrose is due to report in the next few weeks, though the conclusion of the former judge's investigation has already been delayed twice. A key issue is the potential case for compensation from the Government, if it is found that it should have acted earlier to stop the life assurance company taking on new business.
Equitable closed at the end of 2000, a few months after losing a legal case over whether it was allowed to renege on guaranteed annuities sold in the 1970s and 1980s.
Policyholders have questioned why the regulators, first the Department of Trade and Industry, then the Bank of England and finally the Financial Services Authority, allowed the company to continue trading when it was in danger of collapse. Much will hang on the use of a £1.5bn reinsurance contract, agreed between Equitable and Employers Re, a subsidiary of General Electric, in 1999.
This deal allowed Equitable to bolster its reserves, though it was of little financial benefit to the company. A well-placed source told The Independent on Sunday: "The question is whether this contract was a synthetic deal, designed merely to pull the wool over the eyes of the Government Actuary and the auditors. If so, it could be termed a fraud."
The SFO said it had not yet been asked to investigate but if a complaint was placed before it about Equitable, it would probe the collapse of the life company.
The issue of the Employers Re contract is a key defence being used by Ernst & Young, the former auditor of Equitable, against a multi-billion-pound claim for damages being brought against it by Equitable. The auditor says that to approve Equitable's 1999 accounts, it relied on the Government Actuary accepting the Employers Re deal.