The Financial Services Authority has announced firms who advised their clients to invest in CF Arch cru must contact them to see if want their case reviewed.
The FSA said it had now determined there was evidence of widespread mis-selling by firms who failed to assess the funds as high-risk.
This review will determine whether clients have been mis-sold either the Investment or Diversified fund and may be eligible for redress, putting them back into a position they would have been if they had received suitable advice.
This is the first time the FSA has used its consumer redress power to implement a scheme of this type.
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Clive Adamson, FSA director of supervision, said: "Advisers have to accept and understand that ultimately they are responsible for making sure their customers' interests are protected. If they don't understand a product or haven't done due diligence on it, they are in no position to recommend it to their customers.
"It is important that when mis-selling occurs that consumers can be redressed. The vast majority of advisers maintain very high standards and mis-selling by a few only further erode trust in the market which harms the whole sector."
The CF Arch cru funds were two UK open-ended investment companies which invested in a series of Guernsey-domiciled investment companies.

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