Donald Brydon, chairman of the Fund Managers Association (FMA), has voiced concern that the revision of the EU's Capital Adequacy directive may damage the UK and European fund management industry.

The Capital Adequacy directive affects all financial institutions in the Union. It sets out a methodology for calculating a monetary value for the risk in their business and requires the institutions to cover the risk with their capital. Because capital is not free, as shareholders demand dividends, accountants describe this requirement as a charge to the business.