Companies that break the rules could face tougher sanctions under plans being considered by Labour to scrap Britain’s “multiplicity of overlapping regulators”, which the party believes cave in to powerful commercial interests and fail to protect consumers.

A report commissioned by John McDonnell, the shadow chancellor, argues that there needs to be a new authority to investigate commercial wrongdoing as part of an overhaul that brings the estimated 670 industry watchdogs under an overarching business regulator.

There is frustration in Labour ranks at the failure of regulators to tackle market manipulation and wrongdoing despite complaints from consumers and allegations from whistleblowers. McDonnell says it is important to lay bare these failures.

“It’s time the government stepped up and delivered the changes needed to prevent yet more corporate scandals,” he says. “Labour will be studying the contents and recommendations of this report carefully as we put together our reform policies for the next Labour government.”

Under the plans, the Financial Conduct Authority (FCA), which oversees the banking sector, would be swept away, along with regulators that govern the water, energy and media industries and self-regulatory bodies covering law and accountancy, and replaced with a new structure answerable to parliament.

A business commission, made up of “citizens and societal stakeholders”, would oversee compliance with business law and make sure enforcement action was taken as quickly as possible. “Sub-commissions”, including a companies commission and finance commission, would deal with more specific aspects such as corporate governance, accounting, auditing and insolvency, and sectors such as financial services.

The plan would deny big companies the lobbying power they can currently get from packing regulators with former executives, and strip ministers of the power to “sabotage investigations or prevent publication of critical reports”.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

The report’s authors – mostly academic experts drawn from major British universities – say an overhaul of the regulatory regime is needed after a string of scandals that went largely unpunished. The proposals follow two previous studies sponsored by the Labour party examining Britain’s “failed corporate culture”.

The first study proposed reforms of boardroom pay to give customers the right to vote on executive pay at Britain’s 7,000 largest companies. Suggestions also included scrapping share options for executives and making executive pay packages public.

The second study recommended breaking up the big four accounting firms – Deloitte, PwC, KPMG and EY – to limit the cosy relationship between senior executives and the auditors who check company accounts.

Prem Sikka, lead author of the report and a long-time critic of regulators, has attacked the FCA for burying reports into alleged criminal activity. In an article last year he said regulators had failed to protect “consumers, taxpayers and the public in general from harmful practices”.

One instance highlighted in the report follows the collapse of Halifax Bank of Scotland in 2008 in the wake of the international banking crash. Several executives and the company’s auditors were accused of misleading shareholders, the government and Lloyds about the bank’s financial situation before its rescue by Lloyds, but the FCA and its predecessor have not published findings a decade later.

The report says: “The UK has a corrosive political and regulatory culture that appeases business interests by sweeping its shortcomings under the carpet in a way that impedes the development and enforcement of rules and laws necessary for protection of citizens.”“It is shown how regulatory failure is in substantial part attributable to the multiplicity of overlapping regulators. They are seen to be poorly co-ordinated, marred by conflict of interests, and lacking adequate public accountability.”