The failure of Dundee’s taxi marshal scheme is being investigated by the Scottish Public Service Ombudsman (SPSO).
Councillors hoped the plan would protect drinkers from harm on the streets at weekends, defuse trouble and make problem taxi ranks safer.
Each of Dundee’s 1,300 drivers was required to pay £30 towards the scheme with payment of the fee incumbent upon anyone seeking a licence renewal.
In June, however, The Courier revealed that despite taking drivers’ cash 14 months earlier, the council had failed to hire a single member of staff.
Now the SPSO has written to Dundee City Council chief executive David Martin to announce that it will examine the debacle and demand answers.
Mr Martin has been asked whether the council has considered refunding the fees paid by licence holders until a “definite plan to implement the scheme” can be brought forward.
The local authority has also been asked to explain why it did not do that in the first instance, rather than take money and then fail to deliver.
Dundee City Council confirmed it had been contacted by the SPSO, with a spokeswoman stating that it would “respond in due course”.
The SPSO’s examination of the scheme has been prompted by complaints made by city taxi drivers, including Gregor Ross, 47, from Carnoustie.
Mr Ross said he was “delighted” to see the watchdog intervene, telling The Courier that there had been “clear failures” on the part of the council.
“This scheme has taken money from the pockets of every single taxi driver in Dundee and I do not believe that is acceptable,” he said.
“If I had paid for a television package and been unable to view any channels I would expect a refund and it should be no different in this case,” he said.
“We have paid for a service that 16 months on has yet to be delivered. I have to question whether it will ever exist.
“There are serious questions to be asked and taxi drivers want to hear the answers.
“I hope that the ombudsman will bring this to a swift end.”
The council has been disappointed by its inability to deliver the taxi marshal scheme, which would have seen staff stationed at key city centre locations at weekends.
Licensing committee convener Councillor Stewart Hunter hoped they would protect worse-for-wear drinkers and help quell trouble at certain taxi ranks, giving drivers the confidence to stop for passengers in some areas.
The council had sought applicants with the skills to defuse trouble such as retired police officers but suitable applicants have not been forthcoming.
In July the council said it planned one final recruitment drive before giving consideration to refunding drivers.