The Charity Commission has opened a statutory inquiry into Mermaids, after identifying concerns about its governance and management.
Mermaids exists to relieve the mental and emotional stress of children and young people affected by gender identity issues and their families, and to advance public education.
The charity said it had commissioned an independent external report which highlighted a number of significant challenges, and it would cooperate with the inquiry.
In September 2022, the regulator had opened a regulatory compliance case into Mermaids after safeguarding allegations were raised.
The National Lottery Community Fund has paused its funding to the charity while the Commission conducts its case.
A statutory inquiry allows the watchdog to collect further information, potentially through use of statutory powers, to decide what regulatory action may be appropriate.
The Commission said that due to newly identified issues about the charity’s governance and management, it opened a statutory inquiry on 28 November.
Mermaids previously filed serious incident reports to the Charity Commission, on a number of matters recently reported in the media.
A trustee at Mermaids recently resigned after the Times reported he had spoken at a conference hosted by an organisation that promotes services to paedophiles.
Thus far, the regulator said Mermaid’s trustees have fully cooperated with the regulator’s case, but their response has not provided the necessary reassurance or satisfied the Commission at this stage.
Therefore, the case will look into whether the charity’s governance is appropriate in relation to the activities the charity carries out, which involve vulnerable children and young people, as well as their families.
Earlier this week, Mermaid's chief executive left the charity after six years in post.
Mermaids independent external report
A statement form the charity reads: “Earlier this year Mermaids decided to carry out a frank and honest appraisal of our internal culture and how we measure up in terms of equity, diversity and inclusion.
“As part of this process, we commissioned an independent external report which highlighted a number of significant challenges for us.
“We know we must do better and we are absolutely committed to doing so, and will be implementing the report’s recommendations as a priority.
“The charity has an unwavering commitment to safeguarding which is, and always will be, our top priority.
“We will continue to cooperate fully, openly and with complete transparency with the Charity Commission as its inquiry gets underway.”