The market for mobility aids, such as wheelchairs, stair lifts and adjustable beds, is going to be investigated by the Office of Fair Trading (OFT).
It has been prompted by a large number of inquiries and complaints received by the Consumer Direct advice service.
The sale of this equipment, mainly for the elderly and the disabled, is estimated to be worth about half a billion pounds a year.
The OFT said it wanted to see if consumers were being treated fairly.
"In 2009, nearly 5,000 calls were made [to Consumer Direct], an approximate 20% increase on the previous year," said the OFT.
"Concerns have also been expressed in the media and elsewhere that the sector is not working well for consumers, leading to higher prices and less choice, as well as consumers purchasing products that do not meet their needs."
The decision to launch an inquiry, which will get underway in early 2011, was welcomed by the government's watchdog, Consumer Focus.
"We are delighted that the OFT has decided to act on this issue after we presented our evidence to it earlier this year," said Prashant Vaze at Consumer Focus.
"Our research into the disability equipment market shows that there are potentially big problems in this area."
Consumer Focus said the market for these items, which also includes scooters and hoists, was complicated and unregulated.
But it added that so far it had been "difficult to get a full picture of the scale of consumer detriment".
The OFT said it would look at whether traders and customers were being treated fairly, if they were getting enough information to make the right choices, and if buyers had enough bargaining power to stimulate competition and bring down prices.
The regulator said it was seeking the views of interested parties before its investigation got underway, so it could concentrate on the most important issues.
Charmaine Kemp, who runs a business called Wheelie Good Mobility, said the OFT's decision was "well overdue".
"The elderly are in a different position to the general consumer as they don't have the ability to shop around, and are restricted in the information they can gather," she said.
"There are some rogue traders about who abuse the naivety of some customers," she added.