The Personal Investment Management and Financial Advice Association has asked the Financial Conduct Authority to provide more detail on its proposals to extend the reach of its code of conduct to unregulated activities.
In a discussion paper launched in November, the regulator proposed expanding its one of its principles that says a firm must "observe proper standards of market conduct" – to unregulated activities.
But the Personal Investment Management and Financial Advice Association's director of regulation Ian Cornwall said further expansion was needed as to the scope of the proposals being put forward by the City watchdog.
In a letter to the FCA, he said: "We are unclear as to what issues would be within and without the terms 'standards of market conduct for unregulated markets' and 'unregulated financial market activities'."
The consultation paper on industry codes of conduct and discussion paper on FCA Principle five sets out proposals around market conduct for authorised firms' unregulated activities.
Pimfa laid out a number of concerns about the proposed code including worries about increasing the regulatory burden on firms, particularly small businesses, with "quasi-regulation".
Mr Cornwall said: "It would be helpful for the FCA to think further about the process of recognition could ensure the codes do not lead to new competition barriers."
Pimfa raised concerns about whether a code based on practices within the wholesale market might be misread as applying to the retail sector, which may have different practices.
It agreed industry codes should be subject to public scrutiny and said there also should be a cost benefit of any proposed code, which would be subject to consultation too.
The trade body added that the regulator should also be careful to avoid "duplication or contradictory requirement".