The UK's new pay and bonus rules for hedge funds and mainstream fund managers will reflect the industry's "diversity" and its differences from investment banking, the lead funds regulator at the Financial Services Authority said this evening.

Dan Waters, sector head for the asset management sector at the FSA, held fast to the regulator's belief that new EU rules on financial-sector bonuses, originally drawn up for bankers under the Capital Rights Directive III, could and should apply to fund managers too.