Former European Union Commissioner Lord Peter Mandelson has warned of the danger of regulatory overkill in the financial sector as politicians continue to demand tighter surveillance in the wake of the credit crisis.

Speaking at the National Association of Pension Funds' annual conference in Liverpool on Wednesday, he said the UK would need to rebuild alliances with politicians in Europe if it wanted to head off new measures that could undermine its financial sector. He said: "We have to have allies to make sure what is in our national interest is allowed to continue."