The Rangers goalkeeper was seen kicking out at Celtic defender Kristoffer Ajer during his side’s 1-0 defeat at Parkhead on Sunday.
Despite footage having been reviewed by the SFA panel, recently brought in to replace the compliance officer, McGregor was not given a retrospective ban for the offence.
Sutton believes the decision not to deem the incident an example of “excessive force” or “brutality” sends out the wrong message.
Speaking to the Daily Record, he said: “Never mind Allan McGregor – this was more like Connor McGregor. I defend Scottish football to the hilt but this is embarrassing.
“I can’t see how that can’t be deemed excessive or even brutal. They’re saying you need to break someone’s leg or inflict serious injury to take action.
“The SFA are meant to be the guardians of the game but this is completely the wrong message to send out to kids who are playing in the playground.”