It may be a "flawed institution", according to Nick Clegg, but as far as City interests are concerned the House of Lords appears to do its job very efficiently.

More than one in seven lords are in the pay of finance firms or have financial services clients, according to the register of members interests.

Research by the Bureau of Investigative Journalism shows 124 out of the main body of 775 lords have links to financial institutions – 16% of House of Lords voting rights. They also take a large number of seats on committees scrutinising issues vital to the City.

The 124 do not include members with unpaid advisory positions on financial companies or lobby groups.

Swiss bank UBS is among the best-connected City institutions with three Conservative peers on its payroll: Lord Brittan of Spennithorne, who is its vice-chairman; Lord Garel-Jones, who is managing director; and Lord Waldegrave of North Hill, who is registered as an adviser.

In 2010 Lord McFall, until then the Treasury select committee's longstanding "chief inquisitor", became a non-executive director of NBNK Investments, a new bank set up to bid for assets from nationalised banks. Last month it was announced the bank would close. The peer has also become a paid senior adviser to KPMG on regulation and corporate governance and an unpaid member of the advisory council of powerful finance lobby outfit, TheCityUK. McFall was quoted last year saying that "politicians are weaker than the financial industry". They needed more "authority and independence" if they were going to be successful in imposing tougher regulation on banks, he said.

Asked why he had joined the lobby group, he said: "Finding myself in this space between the industry and the political/social environment has been the norm for me."

He pointed to his interest in payment protection insurance and chairmanship of the Workplace Retirement Income Commission. "In light of my challenging views on such matters I was asked to bring my perspective to the advisory board," he said. "I was happy to do so since my relationship involves no non-exec [functions], remuneration or benefits or lobbying interests."

The peer's role with TheCityUK was not initially listed on the House of Lords register of interests, but was added after the bureau contacted McFall.

Committees scrutinising issues vital to the financial services industry are also packed with lords with links to the sector. Four of the 11 members of the Lords committee set up to consider the 2011 finance bill, for example, held positions in banks, and a fifth was about to join a bank. The Finance Act gave large tax breaks to businesses with offshore interests, including multinational banks and insurers.

On the committee were Lord Griffiths, a Goldman Sachs director, Lord Hollick, a partner at private bank GP Bullhound, Lord MacGregor, who was at the time co-chairman of the UK food and agriculture advisory board of Rabobank International, and Lord McFall.

Lady Noakes's appointment as a director of Royal Bank of Scotland was announced shortly after the committee reported.

Other members in the pay of the finance sector included the late committee chairman, Lord Maples, who was also chairman of a venture capital trust and founder of one of the world's largest offshore law firms, Maples and Calder, and Lord Wakeham, adviser to LEK Consulting, a firm with a large client base in the financial services industry. This gave lords who were paid by the finance sector an overwhelming majority on the committee.

Paul Moore, the former HBOS executive who was sacked after warning about the bank's risky sales culture, said: "If you have five people with potential conflicts of interest it is extremely difficult to see how justice can be seen to be done.

"Nobody denies these committees need some form of expertise but five bankers out of 11 is far too many. Most members of the general public would think that is wrong."

McFall said: "Members with an employment or financial interest in a particular sector are not forbidden from taking part in parliamentary work relevant to those interests, subject of course to qualifications."The Bureau of Investigative Journalism is at thebureauinvestigates.com