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Last week the FSA set out out its approach to toughen the industry's defences against mortgage fraud, which included sharing intelligence with enforcement agencies, and revealed it was already liaising with the police on a weekly basis and had been providing data to the authorities. As a result of this, four cases have already been passed on to the police so far this year.

But Jonathan Phelan, head of retail enforcement for the FSA, said while the authorities were taking an increased interest in mortgage fraud it was easier for the City watchdog to take enforcement action against advisers than it was for the authorities to prosecute such individuals.

He said: "From the FSA's point of view we want to take these guys out of the industry but the police will need witnesses and victims. We would like to see more prosecutions but we appreciate that is a difficult job."

In many cases of fraud Mr Phelan said the lender was the victim and would therefore deal with their status as a victim in a particular way.

He said: "They might not be so emotional about it as a consumer victim.

"The police would say it needs a victim to take an investigation forward."

While the FSA has praised the 35 lenders, out of 150 in the industry, who had taken part in the Information From Lenders project, lenders passing on information they believed related to mortgage fraud, Mr Phelan said the regulator would "love that to be more" lenders.

Irrespective of any criminal prosecutions that may take place Mr Phelan said the industry could expect to see a lot more advisers banned and facing heavy fines in the months to come.

He confirmed 24 investigations were ongoing and there were several dozen that were likely be passed on to retail enforcement.

Mr Phelan said: "I can say to any dishonest broker we are on the look out for you and if you are on our watchlist because a lender has expressed concern about you we will get round to looking at you."

Neil Walkling, head of compliance services for Sesame, said while he agreed mortgage fraud was obtaining money by deception, he questioned how interested police would be in some cases, for example where income had been greatly exaggerated.

However he said: "You cannot have a financial system that is based on people telling lies."