The Football League plan to close the loophole that allowed Watford to sign ten players on loan from Udinese.
The Hornets were taken over by the Pozzos in the summer and the Italian family then loaned 12 players in total from their other clubs, Udinese and Granada.
Other Football League clubs are only able to take on loan four players from another club during a season and name five loanees in a match-day squad of 18 players.
Watford were able to take an unlimited number on loan from Udinese because international loans are currently considered “permanent transfers”.
The ruling is a FIFA directive but the Football League is keen to create legislation which brings foreign loans into line with the regulations which cover British-based players – four loan players from one club and a maximum of five loanees in total.
Exact details of the new proposals are unknown but the matter will be voted on at the governing body’s annual meeting in the summer.
The restructured legislation is being put forward by the Football League’s ‘working party for player related issues’ and would need a majority decision by clubs in the Championship, League One and League Two.
But should Watford achieve promotion this season, they would no longer be under the jurisdiction of the Football League and it is unclear whether the Premier League plan to change their regulations.
Hornets head coach Gianfranco Zola claimed he was unaware of the Football League’s plan to close the loophole but stressed he would be unaffected should it make the change.
Watford’s transfer policy in the summer and the Football League regulations which allowed it to happen have been heavily criticised by sections of the media in the last week following several outbursts by Crystal Palace manager Ian Holloway.
The Eagles boss said: “I think we need to look at that and shut the loophole. That can’t be right, can it? But fair play to Watford and Gianfranco Zola. There is a loophole and they’re not breaking any rules but that’s wrong.
“In this country we can borrow two players (the rule says four) from one club. Why can’t that be the same for players from abroad as well? Why can’t we have the same rules? How simple is that.”
He continued: “How can they let this happen? I strongly suggest they look at it. Is that a fair playing field or have I now got to get a link with a foreign club and get all their players playing for me and then what happens to the English players? What happens there? Where would Wilfried Zaha be now?,” Holloway added, regarding the Crystal Palace winger who has signed for Manchester United.
When Zola was asked for his response to Holloway’s comments, he replied: “I don’t even want to comment on it. My duty is to take the players at my disposal and make a team. That’s what I try to do.
“The rules are rules. We’re not doing anything wrong. I understand that some of the people don’t have the resources that we have and they might complain about that but that is not, to be honest, my concern. As I said, I have my problems to deal with and making these players into a team is my only concern.”
Holloway claimed failing to change the rules would reduce the opportunities for British players.
That could have been the case at Watford, and in some instances may have happened, but the likes of Tommie Hoban, Connor Smith and the more experienced members of the squad, like Lloyd Doyley and Fitz Hall, have shown British or Irish players will be selected if they deserve a place in the team.
On the lack of opportunities for home-grown players, Zola said: “That is not really the case. Not only here but everywhere; the best players play on the pitch. So if the local players who are here play better than those that come from abroad then they play, that is for sure.
“I believe in the opposite; I think the young players here will have a big benefit from playing with them [the foreign players].
“When somebody like Matej Vydra, Fernando Forestieri or Almen Abdi come here, I’m sure it will be a big push for the other players that are here to get better and that is exactly the point.
“You need the players that you have here to get better and if you have good players in front of you, then you can improve,” the Hornets boss added.
Click here to see a video of the interview with Gianfranco Zola.