Over regulation of the financial sector once the current crisis is over would stifle enterprise and innovation, Sir Sandy Crombie has warned.

And the Standard Life chief executive also says that governments have to take their share of the blame for fuelling the financial crisis.

Crombie, who marks his fifth anniversary as boss of the Edinburgh-based life and pensions firm this week, said he was concerned that once the current financial crisis is over, regulators will be under pressure to tighten the system too much.

“Crises will happen; crises will emerge again but you have to bear in mind this crisis was not precipitated by entirely by the financial sector,” said Crombie.

“There seemed to be an endless supply of money and debt and governments are not exempt from fuelling that.

“One of the questions not being explored just now is how the governance system coped with it all because it did not stop this happening

“It will be changed but you have to ensure a create safe but nevertheless open for enterprise system otherwise it will stifle innovation.”

Crombie said he accepted that some regulatory systems, particularly with regard to international boundaries has been weak

“But I am not sure that the way to tackle it is to batten everything down,” he said.

Crombie said Standard Life was well positioned to cope with difficult year because it was not totally dependent on “ne money” and said it had no need to ask for Government help.

“We are more driven by the consolidation of assets already in existence and are hopeful of doing good business in 2009,” he said.

Crombie admitted Scotland’s financial sector had been damaged by the failures at big banks RBS and HBOS.

“Reputations have been damaged by this but Edinburgh and Scotland’s financial sector is much more than just eh big banks,” he said.

“Fund management and financial servicing in particular will remain strong.”

Crombie turns 60 next month but again refused to comment on whether he plans to retire. “The board judges who is the best person to do the job,” he said. “I said when I took the job that I would need five years but I meant five years at least.”

Crombie will also continue to run the group’s life and pensions arm for the foreseeable future as they have yet to identify a suitable candidate to replace Trevor Matthews who left for Friends Provident almost 12 months ago.

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