The regulatory and tax framework for Canada’s fund industry continues to rank below average for investors, according to new research from Morningstar Inc.

A report evaluating the frameworks for fund investors in 26 markets gives top marks to the U.K., Sweden and the Netherlands for being investor-friendly.

The U.K. and the Netherlands ranked highly for banning embedded commissions, and Sweden garnered a top ranking for having strong governance and being a frontrunner in disclosure on environmental, social and governance issues.

“When it comes to regulation and taxation in the fund industry, we are looking for policy that ultimately empowers investor success, like tax incentives that encourage individual investment and effective regulation of funds that promotes transparency and limits misleading statements and conflicts of interest,” said Aron Szapiro, head of policy research at Morningstar, in a statement.

Canada scored “below average,” the lowest ranking given in the report, alongside the U.S., Australia, China, Japan and New Zealand.

“We found that regulators in the U.S. and Canada are generally running efficient systems. However, the pace of reform there hasn’t kept up with the rest of the world, explaining why the U.S. and Canada continued to receive a below average grade for regulation and taxation in our study,” said Szapiro.

The report noted that, while the investor experience can still be good in the “below average” markets, “they fall short of the standard set by other markets that govern conflicts of interest and incentivize investing.”

The Canadian Securities Administrators (CSA) are planning reforms that aim to address long-standing investor protection concerns, such as conflicts of interest and a planned ban on deferred sales charge (DSC) fund structures in most of the country. Ontario is proposing a series of curbs on DSCs instead of an outright ban.

However, adoption of these measures likely remains a couple of years away.

Alongside the regulatory concerns, the research also noted that Canada, the U.S., and Australia “all lag on tax policy compared with other markets in the study, creating distortions and disincentives to invest.”

No markets were assigned the lowest rating, as every market that was reviewed provides basic investor protections.

“Since our last report in 2017, the trend towards strong regulation that protects mutual fund investors has remained intact. We’re seeing more markets take steps to motivate citizens of all backgrounds to invest for their futures through special tax incentives or regulations that encourage lower fees, like mandatory disclosures,” said Andy Pettit, Morningstar’s director of policy research for Europea, the Middle East and Africa, in a statement.