Danny Belton, head of lender relationships and L&G, said he would not be surprised if more smaller lenders were leaving the market.
He said "ring-fencing had certainly added a different dimension" to the market as the high street banks "had money they needed to lend out", but stressed it was difficult to see assess whether this had actually expedited their growth.
Nick Morrey, product technical developer at broker John Charcol, agreed ring-fencing had impacted the market but said the level of competition over the past 10 years was the biggest factor leading to Tesco's demise.
He added the competitive market was likely to see more lenders leaving the market as the margin gaps get "squashed further and further".
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