FCA will be investigating the company's market disclosures on the subject from July 15, 2016, to Feb. 20, 2017, Interserve said, adding it would fully co-operate with the investigation.

Interserve shares traded almost 4 percent lower at 0710 GMT.

Interserve announced http://bit.ly/2rCxok2 its exit from the energy-from-waste business in August 2016 after noting cost overruns and delays on a Glasgow contract and said it would take a exceptional charge of 70 million pounds ($94.6 million).

However, the company in February last year more than doubled the expected charge associated with the exit to about 160 million pounds.

This followed a statement in January 2017 that the company saw an increased level of cash outflows from the exited business.

In November 2016, the company had said its progress on contracts in the business were in line with previous guidance, and a day later said its Glasgow Recycling & Renewable Energy project was terminated.

The investigation adds to a long list of problems at Interserve.

Chief Executive Debbie White, who joined the company only last September, has been attempting to turn around the company, after stating in April that its operating model was "inefficient".

Interserve reported a deeper annual pretax loss last month, sending shares tumbling more than 20 percent. The company's shareholders approved a funding plan agreed with creditors in March after it warned of covenant breaches.

Britain's outsourcing sector is grappling with underperforming contracts, a problem which sent rival services and building group Carillion into bankruptcy in January. ($1 = 0.7401 pounds)

(Reporting by Arathy S Nair in Bengaluru; editing by Jason Neely/Keith Weir)