Stanley Fink, the former chief executive of Man Group, said in an interview with the FT that the European Commission�??s proposed regulation would be �??very restrictive�?� for non-EU funds and some styles of investing.

�??That could, and probably would, lead to retaliatory action whereby European hedge funds will be stopped from marketing in other jurisdictions [such as the US] �?? and that could be very bad for the industry,�?� he said. Asked if the restrictions could spark an international hedge fund war, he said: �??I think that could be one of the unintended consequences.�?�

Mr Fink, who is now chief executive of ISAM hedge fund and co-treasurer of the UK�??s opposition Conservative Party, criticised the Labour government for its failure to defend the UK financial services industry. �??It is hard to imagine that legislation that harmed agriculture wouldn�??t have been killed at birth by the French, and legislation that damages the car industry wouldn�??t have been stopped by the Germans,�?� he said.