The Investment Association and the US-based Investment Company Institute have made a last minute attempt to force the Financial Conduct Authority to rethink wide-scale fund market reforms.
The two lobby groups believe the UK market will be hindered by what it sees as a heavy-handed approach.
The regulator plans to make portfolio managers provide deeper levels of transparency and fund oversight.
However, critics maintain this approach could erode the City’s standing as a global hub when its position is already under threat from Brexit.
According to the FTAdviser's sister paper the Financial Times, the lobby groups are anxious the FCA’s final report is generating a flight culture among fund management companies, which are investigating the possibility of relocating staff to the continent.
Chris Cummings, chief executive of the Investment Association, said: “Our argument is not ‘be nice to the fund industry because of Brexit’. We would be having the same conversations with the FCA if Brexit were not happening.
"But every big company I have spoken to has been approached multiple times by the French. BaFin, Germany’s financial regulator, was in London only last week telling everybody just how easy it is to set up their business in Frankfurt.”
The Investment Association has been particularly vocal in its criticism of the FCA’s proposal to introduce a single all-in fee that would include trading costs.
The IA would prefer trading costs to be published separately from the annual management fee.
Dan Waters, managing director of ICI Global, the international arm of the ICI, is reported as saying he also has “serious reservations” about the coincidence of the FCA’s investigation and the Brexit negotiations.
Mr Waters said: “This is a difficult moment for the UK fund management industry. New regulatory initiatives during this period of unprecedented disruption could harm, rather than benefit, investors.”