This Pholiota squarrosa AKA Shaggy scalycap is living happily in the stem wound of this Acer pseudoplatanus (Sycamore) photographed last weekend in Barrowburn, Northumberland, UK.
This parasitic, straw coloured mushroom has a shaggy hair effect on its cap and stem. It has gills on the underside and can be found growing only in Autumn.
The Shaggy scalycap attacks the tree causing white rot usually around the base of stems, occasionally at height on trunks and unions. In this photo, 2 feet above the ground in an open wound. White rot decays the wood, where both cellulose and lignin break down.
In the area of white rot, a brittle fracture can occur and in this case, the stem may fail, but probably not for some years.
A variety of broadleaf and coniferous trees including Sycamore, Oak and Robinia.