This is the view of Penny Shepherd, chief executive of UK Sustainable Investment and Finance (UKSIF), who was responding to the publication of a report on the topic by the regulator.
She suggested there is a real risk that financial institutions may find themselves being stifled by such input.
Ms Shepherd said: "If the FSA intervenes more strongly in the design of financial products, its supervisors will need a greater understanding of modern sustainable and responsible investment approaches."
In her opinion, financial options have the capability of aiding consumers as well as the wider society.
Writing for Money Marketing, senior research fellow at the Social Market Foundation John Springford urged the FSA not to restrict market forces, rather use them to make transparency a virtue in the industry.
He hailed the government's Simple Products agenda as a positive step.
Source:knowledgetoaction.co.uk
