The Church of England, one of whose commissioners last year described hedge funds as ‘bank robbers’ following their short-bets on UK bank stocks, has emerged as an unlikely defender of the industry as it faces the prospect of tough new regulation from the European Union.

A group of six of the UK's largest charitable foundations, including the Church of England, has told a House of Lords committee that the EU's proposed directive would "significantly restrict our ability to generate funds to pursue our charitable missions and thus reduce our impact for public good".