David Steel has been suspended from the Liberal Democrats over remarks he made to a child abuse inquiry about the late MP Sir Cyril Smith.
Lord Steel, a former Liberal leader, said he in 1979 asked Smith about claims he abused boys at a Rochdale hostel in the 1960s.
Party officials have decided he should face a formal investigation.
The move comes after Lord Steel, a former Scottish Parliament presiding officer, gave evidence to the Independent Inquiry into Child Sexual Abuse (IICSA) on Wednesday.
The party had already announced they have started disciplinary proceedings against him, after he told the probe a conversation with Smith left him “assuming” the allegations were correct, but the party did not investigate them.
The decision followed a meeting of senior figures within the Scottish party on Thursday evening.
In a subsequent statement, the Scottish Liberal Democrats said: “Following the evidence concerning Cyril Smith given by Lord Steel to the Independent Inquiry into Child Sexual Abuse on 13th March 2019, the office bearers of the Scottish Liberal Democrats have met and agreed that an investigation is needed.
“The party membership of Lord Steel has been suspended pending the outcome of that investigation. That work will now commence.
“It is important that everyone in the party, and in wider society, understands the importance of vigilance and safeguarding to protect people from abuse, and that everyone has confidence in the seriousness with which we take it.
“We appreciate the difficult work that the Independent Inquiry into Child Sexual Abuse is doing on behalf of the victims and survivors of abuse, and the country as a whole.”
At the inquiry Lord Steel denied he had been “hiding his head in the sand” over the child abuse allegations made against the former Rochdale MP.
Lord Steel said he asked the late politician in 1979 about claims that he abused boys at a Rochdale hostel, and found they dated back to Smith’s time as a Labour councillor in the 1960s.
He told the inquiry he came away from the conversation with Smith “assuming” he had committed the offences, because he did not deny them.
Lord Steel recalled Smith had told him police had investigated the claims and taken no action.
The IICSA heard no formal inquiry was then held by the Liberal Party into the claims.
On the suggestion that no action was taken then because Lord Steel did not want to get involved in a nasty confrontation with Smith, he told the hearing: “I wouldn’t have been hiding my head in the sand.
“These allegations all related to a period some years before he was even an MP and before he was even a member of the party, therefore it did not seem to me that I had any position in the matter at all.”
Smith, who was an MP for Rochdale between 1972 and 1992, is accused of sexually abusing a number of boys.
Allegations against him found a greater public spotlight after he died in 2010.
Lord Steel’s conversation with Smith was prompted by a story in Private Eye.
It came after the Rochdale Alternative Press published a story in 1979 saying police had investigated Smith over allegations of abuse against teenagers at the Cambridge House hostel in the town.
Lord Steel told the inquiry: “He accepted the story was correct. Obviously I disapproved but as far as I was concerned it was past history.”
In a statement released before he was suspended on Thursday, Lord Steel said he wanted to “clarify what happened in 1979 when I asked Cyril Smith about the report in Private Eye”.
He added: “As I told the inquiry yesterday, I did not have that report with me when I tackled him, nor did we discuss the details in it.
“He admitted to me that the report was correct, in that he had been investigated by the police at the time and no action taken against him.
“I had already told the inquiry in writing that in my opinion he had been abusing his position in Rochdale Council (that is to gain access to council-run children’s homes), but that had been properly a matter for the police and the council, and not for me, as he was neither an MP nor even a member of the Liberal Party at the time.
“I was in no position to re-open the investigation.”
Liberal Democrat leader Sir Vince Cable said the decision to suspend Lord Steel was taken by the party in Scotland “quickly, properly and in an orderly way”.
He told BBC’s Newsnight: “There was very serious concern about what he said, serious allegations, they have got to be investigated.”
Richard Scorer, a specialist abuse lawyer at Slater and Gordon, who is acting on behalf of some victims at the inquiry, said: “My clients will welcome the news that Steel is finally being made to face the consequences of his inaction.
“His failure to stop Smith in 1979, allowing him to go on and abuse more young boys, is inexcusable and he must be held to account.”