The Charity Commission has escalated its investigations into Mermaids, the regulatory body announced on Friday, responding to “newly identified issues” about the governance and management of the transgender children’s charity. A statutory inquiry has been opened after an earlier lower-level regulatory compliance case launched in September in response to safeguarding allegations. The commission will investigate whether there is “serious systemic failing” in Mermaids’ governance and management. The trustees have cooperated fully, but the regulator said their response had “not provided the necessary reassurance or satisfied the commission at this stage”. Investigators will assess whether the charity’s governance is appropriate in relation to the activities it carries out, which involve vulnerable children and young people. They will also look at the “management of the charity by trustees including its leadership and culture”, whether there has been any misconduct or mismanagement by the trustees, and whether they have fulfilled their responsibilities under charity law. The commission said it was yet to draw any conclusions and the escalation of the investigation was not indicative of a finding of wrongdoing. It is not clear whether the unexpected and unexplained resignation of the charity’s chief executive, Susie Green, on 25 November was prompted by the commission’s decision to launch a statutory inquiry, which was made public on 28 November. The commission said in its annual report that it had concluded 5,324 regulatory action cases in 2021-22. Forty-five were statutory inquiries, which it describes as its “most serious type of regulatory engagement”. It issued 12 official warnings and disqualified 14 trustees as a result. Mermaids said in a statement that it had separately commissioned an independent external report earlier this year “to carry out a frank and honest appraisal of our internal culture and how we measure up in terms of equity, diversity and inclusion”. The report 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.” Mermaids has faced heightened public scrutiny in recent months. It is involved in court hearings after launching an appeal against the Charity Commission’s awarding of charitable status to LGB Alliance, which has been critical of “gender ideology’’. It is understood to be the first time one charity has attempted to strip legal status from another. The Telegraph published a story in September alleging that Mermaids had offered to send breast binders to children against their parents’ wishes. The Times later reported that a Mermaids trustee gave a presentation in 2011 for an organisation that aims to promote “a science-informed understanding about people … with an attraction to children”. The trustee, Dr Jacob Breslow, later stepped down from his position, and Green acknowledged that his appointment had been a mistake. Responding to the earlier regulatory inquiry, the National Lottery community fund has suspended payments to Mermaids, and the Department for Education has removed it from its mental health and wellbeing resources for schools.