(Bloomberg News) -- One or more self-regulatory organizations would oversee U.S.-registered retail investment advisors under a draft bill by Representative Spencer Bachus, the chairman of the House Financial Services Committee.

A Financial Services subcommittee is scheduled to hold a hearing tomorrow on investment advisor oversight. The meeting follows a Securities and Exchange Commission report suggesting a self-regulatory organization as one option for fixing the SEC's inability to inspect investment advisors at a sufficient pace. Critics of the SEC have blamed the agency for failing to uncover investment frauds including the Ponzi scheme of Bernard Madoff.

"It will result in much more effective regulation and examination," said Bachus, an Alabama Republican, speaking to reporters in Washington. "Madoff ought to tell you something about how there were all sorts of rules that were violated."

The SEC's January report was required by the Dodd-Frank Act, which didn't give the agency authority to make changes.

"The staff believes that the Commission will likely not have sufficient capacity in the near or long term to conduct effective examinations of registered investment advisors with adequate frequency," according to the report, which listed options that included putting one or more self-regulatory organizations under SEC authority -- potentially mirroring the Financial Industry Regulatory Authority's oversight of brokers.

"Had Finra been on the job I don't think you would've seen" the Madoff fraud, Bachus said.

"The current regulatory disparity not only puts investors at great risk, it undermines investor confidence, which in turn jeopardizes not only the investment goals of millions of Americans but also the economy at large," said Dale E. Brown, president and chief executive officer of the Washington-based Financial Services Institute Inc., in a statement.