Dean Ryan believes that the RFU have to review the promotion and relegation system after the London Welsh disappointment.
The club were dealt a massive blow ahead of their RFU Championship final against the Cornish Pirates with the news that they will not be granted promotion should they win.
The Exiles were confident that they had everything in place to secure their place in the top-flight should they overcome the Pirates over two legs.
However, the Rugby Football Union's board of directors has revealed that the club have failed to meet the "Minimum Standards Criteria" required for promotion.
And with the Pirates opting against undergoing the independent audit required for promotion, the decision means neither side in the play-off final can go up - so Newcastle will avoid the drop.
"We are going into a Championship play-off where neither side can go up to the Premiership" Ryan told Sky Sports News. "That is not right.
"If people believe that relegation and promotion is fundamental to keeping the integrity of our leagues, then we cannot have legalisation which makes that impossible to happen.
"London Welsh are down on a couple of issues - the most important one is privacy of tenure, which states that a club must demonstrate that they can host home fixtures at the time stipulated by Premiership Rugby and/or the host broadcaster.
"I think that one of the areas of contention is that if you look into the Premiership you see that a number of clubs who were involved in Premiership rugby right from the outset are exempt.
"That is going to be the debate going forward - how are we going to have promotion and relegation when some of the criteria set down is prohibitive to getting other clubs in?"
Ryan believes that promotion and relegation is vital for rugby to develop, but can understand why some clubs may want to ring-fence the Premiership.
"On one side you have the Premiership clubs with owners who want to protect their investment and then you have the RFU who are looking to have a seamless process which allows promotion and relegation," he added.
"I am for promotion and relegation in the competition, but I think I we have gone a little bit far in setting the criteria and it has become prohibitive.
"I think we need to have a review of the system and how potentially a set of criteria can be fulfilled over a period of time.
"For clubs like London Welsh and the Cornish Pirates, to stump up huge amounts of investment to fulfil some sort of criteria before they actually find out whether they are part of the Premiership is not right.
"We have to find a different way of looking at the system and I think the decision against London Welsh will force that."
Ryan, who won six caps for England and coached Gloucester in the Premiership, says that those clubs who win promotion in the Premiership should be given time to reach the criteria.
"I think perhaps there should be a timeline - once you are in you will obviously receive a large share of the investment going around the Premiership and then maybe you will have a certain amount of time to fulfil the criteria.
"I am not saying this is the answer but we have to review the system, currently it is not working."