The Government's Cat standard is "breathtakingly irresponsible" according to the Association of Unit Trusts and Investment Funds.
The industry body believes that the policy is an irresponsible act which cynically puts the savings of the most needy in society at risk.
Autif director of communications Anne McMeehan says: "The Government knows that no risk warning or advertising campaign can offset the implied Government endorsement which people will read into a Cat-marked product."
But many managers have backed the scheme.
Axa Sun Life chief executive Les Owen says: "We welcome the Government's changes to Cat standards. It is heartening to see that the stocks and shares component of the Cat standard will include authorised unit trusts and oeics."
The life office is concerned that there must be more recognition of the need for financial advice now there is a wider range of funds available.