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Former royal valet Mr Fawcett is accused of promising to help secure a knighthood and British citizenship for a Saudi billionaire donor.
Mr Smith said: "Failure to properly investigate these matters will damage public trust in the police, the royals and the honours system.
"Time and again the royals blame their staff or associates for their own mistakes.
"It is difficult to believe Charles wasn't aware of these arrangements or promises. It's time the royals were personally challenged over their conduct."
Ex-Liberal Democrat MP Norman Baker has also written to the Met asking the force's Commissioner, Dame Cressida Dick, to launch a criminal probe.
Lordship & Ladyship Title Packs
Purchase a personal Lordship or Ladyship Title Pack with dedicated land in Scotland.*
Our Title Packs are based on a historic Scottish land ownership custom, where landowners have been long referred to as "Lairds", the Scottish term for "Lord", with the female equivalent being "Lady".
*This is a purchase for a personal dedication for a souvenir plot of land. You may choose to title yourself with the title of Lord, Laird or Lady.
Every Lordship or Ladyship title pack contributes to the preservation and protection of woodland areas in Scotland. As the intention is for the land to be kept in its natural state, we ask that all interested parties do bear this in mind.
So honours for people making large charity donations and helping cure the rampant poverty and injustices in international locations?
But really my Aunt got one had the party put it in a drawer never mentioned it again.
Stop spending the short amount of time you have on this planet giving a #e about them.
But make sure you don't benefit from any of the spin-off contracts and tourist taxes that bring in cash to the countries coffers.