The chief executive of the Financial Conduct Authority has warned of a "pronounced" build up of debt among young people.
In an interview with the BBC, Andrew Bailey said the young were having to borrow for basic living costs.
The regulator also said he "did not like" some high-cost lending schemes.
He said consumers, and institutions that lend to them, should be aware that interest rates may rise in the future and that credit should be "affordable".
The head of the FCA was talking to the BBC as part of its 'Money Matters' coverage, looking at the issues of credit and debt in the UK.
Mr Bailey said action was being taken to curb long-term credit card debt and high-cost pay-day loans.
The regulator is also looking at charges in the rent-to-own sector which can leave people paying high levels of interest for buying white goods such as washing machines, he added.
"There is a pronounced build up of indebtedness amongst the younger age group," Mr Bailey said.
"We should not think this is reckless borrowing, this is directed at essential living costs. It is not credit in the classic sense, it is [about] the affordability of basic living in many cases."
Although Mr Bailey said that high levels of consumer debt was not a crisis "in the macro-economic sense", it did matter to struggling individuals whose stories he had listened to during visits to debt management charities.
"There are particular concentrations [of debt] in society, and those concentrations are particularly exposed to some of the forms and practices of high cost debt which we are currently looking at very closely because there are things in there that we don't like," Mr Bailey said.
"There has been a clear shift in the generational pattern of wealth and income, and that translates into a greater indebtedness at a younger age.
"That reflects lower levels of real income, lower levels of asset ownership. There are quite different generational experiences," he said.
Mr Bailey was speaking as research shows young people in particular are concerned about the amount of debt they are carrying and their ability to repay that debt
He said the high price of renting and lack of income growth meant that more people had to use credit to make ends meet.
Recent Bank of England figures show that consumer debt, excluding mortgages, now totals over £200bn and is approaching levels not seen since the financial crisis.
The increase in what is known as "unsecured lending" on credit cards, car loan schemes, personal loans and overdrafts is running at 10% a year.
People are also saving less as ultra low interest rates eat into returns.
"Obviously we all question how long this can that go on for," Mr Bailey said. "But in aggregate it isn't on its own something that we should be describing as a crisis."
He added: "I am not of the school of thought that credit should not be available to this section of society because credit should be there to smooth income in the classic sense, and we know there are more people with erratic income flows, that is one of the features of the so-called gig-economy."
Mr Bailey said that "sustainable credit is a necessary part of society".