The failure to identify the person or persons who breached security to fly an Irish tricolour over Stormont is disappointing, Jim Allister has said.
The incident took place on June 3, sparking unionist anger and a police investigation.
However, a senior police officer has now confirmed that the case was closed in September with no culprit identified.
The TUV leader said: “I am disappointed but not surprised that no one is being prosecuted for the illegal erection of a foreign flag on Parliament Buildings.
“This announcement will only serve to deepen the distrust of loyalists for the PSNI.
“After the heavy-handed response to the flag protests it would appear that it is one rule for people with a Union Flag and quite another for those with an Irish tricolour.”
Mr Allister added: “The Northern Ireland Assembly is the only devolved legislature in the UK which doesn’t fly a flag on a daily basis.
“Stormont should follow the example of Westminster and the Welsh Assembly which fly the Union Flag all year round.”
The end of the police investigation came to light during MLAs’ questions on the Assembly Commission earlier this week.
Responding to a question from Gordon Dunne of the DUP, Sinn Fein’s Caitriona Ruane said the PSNI concluded its probe in mid-September and that “no persons have been made responsible”.
She added: “The PSNI has indicated that it can take the matter no further at this time.”
The police district commander for Belfast has now confirmed the official explanation given during Stormont questions.
Chief Superintendent Nigel Grimshaw said: “This investigation was treated like any other – a full investigation was carried out until it was deemed that all lines of enquiry had been exhausted.”