The Financial Conduct Authority (FCA) is increasingly turning its focus to individual mortgage products and more intervention in the market is likely, according to Deloitte.
Speaking at the CML product innovation conference in London, a number of lender representatives said the regulator was becoming more involved with product creation.
Stephen Williams of Deloitte said the FCA was currently examining a number of products and he expected the regulator to start issuing warnings against certain lenders.
"The FCA has a strategic objective to intervene earlier in the product cycle," he said. "They want to be intervening earlier and need very little evidence to do so in the current regulatory environment.
"The FCA is looking at 20 products and 48 contracts at the moment, terms and conditions etc. This is an area where we expect to see a large degree of enforcement coming through."
He said the regulator wanted lenders to be able to prove products had been designed for specific sections of the market but added that the regulator was still keen to foster competition.
"I think a lot of it is putting a product out there and seeing what sticks where and then perhaps define the market a little later. What the regulator wants to see is upfront where things are targeted.
"It's worth stating that the FCA has an operational objective to increase competition and speaking to people who are senior within the regulator they would like to see more innovation and are driving firms to be more innovative.
"Unfortunately when you get to lower levels of the FCA and those actually visiting the pedantic nature of how they operate, the focus on new and innovative products means huge amounts of time and effort for the business. I can see most of my clients going up the risk curve rather than rather being innovative."
This was echoed by Matthew Wyles, senior adviser at Castle Trust, who said lenders were far more willing to take on extra risk than create innovative products which would potentially come under FCA scrutiny.
Jaedon Green of Leeds Building Society and Barclays' Andy Gray both said they had involved the regulator from the start when creating their respective Welcome and Family Springboard products.
