Former Treasury minister Deputy Charles Parkinson raised the matter as the States debated the GFSC's annual report and accounts and questioned whether the commission should take more interest in the investment propositions rather than its focus on compliance.
It follows the news that islanders with thousands of pounds invested in funds operated by Providence, the Guernsey-headquartered investment business, could be facing losses following global regulatory moves.
Following the debate in the States, Deputy Parkinson said the current approach seemed to be that as long as a fund complied with the regulations, the Guernsey Financial Service Commission was satisfied.
'I feel to protect the reputation of Guernsey, the GFSC may want to be more cautious in approving funds investing in high-risk areas.
'If you have any fund set up designed to invest in a high-risk area you run the risk that investors will lose their money.
'To me, it is not probably enough to say, "Oh well, you tick all the boxes and therefore we are going to approve it".'
