The Investment Association (IA) has called an end to its UK Equity Income sector consultation nearly a year after launch, with the trade body opting just to lower the yield requirements for funds in the peer group.
After "extensive consultation" with advisers, asset managers and consumers, the IA said it would lower the sector's yield hurdle from 110 per cent of the index yield over a three-year rolling period to 100 per cent.
Failure to achieve 90 per cent of the index yield in any one-year period will still result in a fund being removed from the sector, however.
The trade body has also decided to copy the rules over to the Global Equity Income sector despite originally suggesting the consultation would only affect UK Equity Income funds. The IA said this was for consistency's sake for consumers and advisers.
The final conclusions come after what has proved a prolonged and contentious process for the body.
Investment Adviser reported in December the sector committee was leaning towards a simple relaxation of rules. However, this came after last year's original consultation suggested three possible options, including no change; replace the 110 per cent hurdle with a requirement to yield more than the All-Share over three years; or scrap yield rules in favour of specific disclosure relating to income generation.
But as no consensus emerged, the trade body subsequently decided to extend questioning to advisers and consumers, pushing back the decision deadline to the end of 2016. This was then followed by a number of other proposals, including splitting the existing sector.
The end to consultation will come as a relief to the some 20 funds ejected from the sector since 2013 for failing to meet its yield requirements, either over one or three years. Members have now been invited to submit funds they believe meet the new criteria, with the changes coming into force from next month.
IA capital markets director Galina Dimitrova said: "The change is designed to ensure that consumers and advisers have better visibility of the choice of equity income products that exceed their respective market yields. As ever, we will continue to monitor the fund market to ensure that all of the IA sectors reflect the wide range of products the asset management industry has to offer savers around the world."
