Max Mosley says pitting F1 teams with massive budgets against those barely surviving is like giving the former a bigger engine to race.
During his tenor as FIA president, Mosley often campaigned for a budget cap as the costs of competing in Formula 1 continued to rise.
Despite his efforts that never materialised and the sport is now counting the costs.
Last season two outfits, Marussia and Caterham, went into administration with only one finding a way back onto the grid this season while another, Force India, sat out the bulk of pre-season testing due to financial constraints.
Mosley says something has to be done to find a solution.
"At least half the teams simply can't compete because they haven't got enough money, and that to me is wrong," he told DPA.
"You obviously wouldn't allow one team to run a bigger engine than another team and yet if one team has got five times as much money the effect is exactly the same as if they had a bigger engine.
"It's not fair from the sporting point of view.
"The only way to deal with it is to get everybody to agree.
"You can sit all the teams down and say 'look collectively we've got a massive problem because some of you have got enough money but most of you haven't and if we go on like this Formula 1 is going to collapse, so I am inviting you all to agree to a change'.
"But they would have to all agree. You can't do it without unanimity, unfortunately."
Mosley reckons that part of the problem is F1's new technology.
He said: "About 90 percent to 95 percent of what goes on (technologically) is not visible to an outsider and even kept secret within the teams.
"So it (F1) has changed enormously. Whether it's changed for the better – I think it's gone too far."