Equitable Life came to close to collapse in 2000
The Equitable Life scandal is to be examined by the European Parliament.
The investigation will focus on whether the government failed in its regulatory duty and may call on UK Treasury officials to testify.
Equitable came to the brink of collapse in 2000 when the insurer admitted it could not afford to live up to pension promises it had made.
More than 200 MEPs signed the petition calling for the investigation into the scandal, which hit a million savers.
The committee of 22 MEPs will examine "allegations that UK regulators consistently failed to protect policy holders by rigorous supervision of accounting and provisioning practices and of the financial situation of Equitable Life" .
The parliament will decide which MEPs will sit on the investigating committee on Thursday.
The investigation is expected to take up to a year to complete, but an interim report will be published within four months, according to the European Parliament website.
Many Equitable Life policyholders lost a substantial portion of their life savings when the insurer had to cut payouts to stay afloat.
Groups representing Equitable Life policyholders welcomed the European Parliament investigation.
"This is great news. The parliament can look at the problems objectively as they are not involved in any way with what went on...Hopefully the many people who lost out will finally get some answers," Liz Kwantas of the Equitable Life Members Help Group told BBC News.
The European Parliament's investigation is the latest in a long line of inquiries into the Equitable scandal.
In 2004 Lord Penrose published an extensive report into history of Equitable Life.
The report pinned most of the blame for the near-collapse of the world's oldest mutual insurer on the management team, accusing it of "dubious" practices and nurturing a "culture of manipulation and concealment".
But the government did not escape censure, with Lord Penrose pointing to regulatory failings.
Following the publication of the Penrose report, Ann Abrahams, the Parliamentary Ombudsman, announced that she would reopen her investigation into the scandal.
The Ombudsman's report will be out later this year. Ultimately, the Ombudsman could order the government to compensate Equitable Life's policyholders.