Thousands of people who have lost money with the defunct investment firm Keydata can now apply for compensation.
The firm has been officially declared in default by the Financial Services Compensation Scheme (FSCS), opening the door to compensation claims.
Keydata went bust in June and administrators from the firm PwC are trying to sort out its affairs.
The company had 43,000 customers who invested in a variety of polices known as "structured investment products".
Of these, 21,500 people have now been told they can lodge a claim with the FSCS, which could pay them up to 100% of the first £30,000 lost, and 90% of the next £20,000.
The FSCS said there were, so far, two categories of potential claimants.
The first are the 5,500 investors who appear to have lost all the £103m they had invested in total in Keydata's Secure Income Bonds issues 1, 2 and 3.
"The administrators have confirmed that there is evidence to suggest that the underlying assets held in these funds have been liquidated and may have been misappropriated," said the FSCS about this group.
"In addition, a number of these investments were sold as [individual savings accounts] Isas, and HMRC has now confirmed that they did not meet the necessary requirements for qualifying as ISA investments," it added.
The second group of 16,000 people have investments in some of the other Keydata policies, lasting for up to five years. They have not lost their investments, but have been been told that their policies were falsely portrayed as Isas.
These are holders of Keydata's Secure Income Bond issue 4, Secure Income Plans 1 to 12, Defined Income Plans 1 to 8 and Income Plans 1 to 12, and 14.
HMRC has agreed that these people will not have to pay tax for the period before the investment firm's administration.
However, they can apply for compensation from the FSCS for having to pay tax on their investments since Keydata went into administration, which in practice will mean that the FSCS pays the tax for them directly to HMRC.
"The vast majority of customers will not pay tax on their investments in Keydata Isas - as HMRC will pursue the company for tax due prior to administration, and FSCS will pay the tax on behalf of investors for the period since the administration," HMRC said.
"People will be able to reinvest their money in a new Isa without losing their tax-free allowance, once their investment is redeemed or matures, or they receive compensation," it added.
Dan Schwarzmann, joint administrator for PwC, welcomed the latest developments.
"We are extremely pleased to hear that the FSCS is going to make compensation available for eligible investors and also delighted with HMRC's announcement that Keydata investors in products that do not comply with Isa regulations will be able to retain their Isa wrapper," he said.
As regards the remaining investors, it appears they are not entitled to compensation.
That is because either their policy was in fact a genuine Isa policy, or it was never sold to them as an Isa policy in the first place.
There are however 2,500 people with Keydata's Hometrak income property bonds.
Pwc said their position was still being investigated and was still unclear.
In August, PwC told the holders of these bonds that they would not be paid paid any interest "until further notice" and was still trying to work out if any of their money might be recovered.