Hard to tell when looking at fluffy stuff in a fluffy pic
Fluff, often looking like it is perched on top of the skin, is often a secondary infection caused by a wound underneath. It may, or may not, need some sort of anti-fungal treatment.
I know of some who discovered that when they manged to pull the fluff off, found the fish had actually healed nicely underneath and nothing further needed to be done.
Are you able to catch the fish for a closer look and gently see if the fungus is easily removable? If it is, you may have to treat the underlying infection. I wonder if it originally bashed its head getting stuck in a tight spot at some point and that is how it got the original damage.