John Mann, Labour MP for Bassetlaw, claims the law needs to change to stop business owners taking money out of their companies with no liability.
This comes after it was announced the popular high street store BHS has gone in to administration with debts of £1.3billion and a pension deficit, with 11,000 staff at risk of losing their jobs. The conduct of former owner Sir Philip Green is being called in to question after he took millions from the company and then sold it for just £1 last year.
Mann insists this should never have been allowed to happen.
"The law is far too weak, it allows people to take monies out [of companies] regardless of the state of the company and sell them on, and have no liability when it all goes belly up," he told Julia Hartley-Brewer.
"He's [Philip Green] profited hugely out of it, it's entirely unethical. It ought to be illegal, but it's not."
As Green hasn't done anything against the law, Mann believes the way in which to hold him accountable would be for the government to strip him of his knighthood.
He added: "This is the one bit of leverage we have if he fails to do the decent thing, which would be to pay the money back and help with some of the pension fund deficit, so he doesn't profit from this disaster."
But first he thinks Green needs to be given the chance to put the situation right.
"Let Sir Philip Green demonstrate he's honourable. If he's honourable [he can] keep the knighthood. If he's not prepared to be, strip him of it and do so very publicly."