The former Football Association chief executive David Davies believes that Fabio Capello may be in breach of contract after the England manager openly challenged the decision to strip John Terry of the captaincy.

Speaking to the BBC's Breakfast Time show on Monday morning, Davies said that Capello, who reportedly earns £6m a year as manager of the national side, may have breached his contract with his comments and could face action from the FA.

"It is being taken very seriously by the FA," Davies said. "You have to ask what his motive is. You have to suspect he wants to prevent John Terry retiring as a player before Euro 2012, but there are wider issues.

"You could have what some of the media are calling a morality circus while England are trying to win the second major tournament in football.

"A contract may have been breached, there is strong leadership now at the FA from David Bernstein. Last week he wasn't slow to take things forward and he may not be slow to do so now."

Capello said he "completely disagreed" with Bernstein's decision during an interview with the Italian broadcaster Rai 1 on Sunday.

"I spoke to the chairman and I told him that I don't think someone can be punished until it becomes official," the Italian said. "The court will decide. It's going to be civil justice, not sports justice, to decide if John Terry committed the crime he is accused of. I thought it fair that John Terry keeps the captain's armband."

The FA opted to remove Terry as captain once it was known the Chelsea defender would not face trial over allegations he used racist language towards Anton Ferdinand until 9 July, eight days after the Euro 2012 final. Terry denies the charge.