Writing on his regular blog, Mr Saunders said a fairer way of funding the Financial Services Compensation Scheme was of “crucial importance”.

The fund management industry recently had to pay out over £200m in FSCS fines for the failures of Keydata.

Investment intermediaries, including financial advisers, can currently pay up to £100m in levies then anything over that is paid by fund managers.

There is potential that more could be due from fund managers in the future for the failures of spread betting firms.

Mr Saunders said: “Traded life policies and spread betting have nothing to do with fund management, and it is manifestly unjust that fund managers and fund managers alone, should be liable to cross-subsidise these compensation costs. (One could say exactly the same, by the way, about IFAs who, as ‘investment intermediaries’ themselves, have to meet these costs directly.)

“It would be much fairer, given that we cannot expect the taxpayer to meet the compensation costs, to spread them across all financial services firms when providers of more exotic products go down.”

Mr Saunders is also worried about the impact of the upcoming Financial Services Bill and the new tri-partite system of regulation.

FSCS funding will be decided jointly by the Prudential Regulatory Authority and the Financial Conduct Authority.

Mr Saunders thinks this will result in two separate schemes and that if banks and insurers are run by the PRA rather the FCA this will mean higher fees for the fund management sector who are run by the FCA.

He said: “The regulator need to be in no doubt that such an outcome would be a travesty, and it would face a storm of protest from the fund management industry. The aim of the review should be to correct the injustices in the present scheme, not make them worse.”