Australia investor friendly, not consumer friendly: Report

Morningstar research has revealed Australia is one of the most investor friendly nations in the world when it comes to fees and expenses.  However, consumers may be getting the short end of the stick when it comes to fees and charges.

The Global Investor Experience Study found Australia, the Netherlands and the United States have the lowest fees for investors, while countries like Italy and Taiwan rated the worst.

Morningstar's global practice leader of manager research Grant Kennaway said: "Since the last study in 2017, we've seen fund fees continue to decline across global markets."

"This reflects a number of key trends including orderly competition, regulatory intervention, and changing practices that have led to the unbundling of advice and sales fees from fund expense ratios in some markets."

This is the third consecutive time Australia has received a top grade, reflecting that effective regulation has led to greater fee transparency.

"We conclude that the investor experience is improving across multiple markets given lower fees and ease of entry for investors to buy funds without loads or trailing commissions," said Morningstar.

Despite low fees for investors, it appears this is not getting passed on to consumers.

The Australian Securities and Investments Commission have signaled it is looking into fees charged to consumers for financial advice.

ASIC is looking into the "reasonableness" of fees and is looking to impose a consistent approach to advice fees across the superannuation industry.

In a public letter APRA and ASIC urged the importance of superannuation trustees undertaking appropriate oversight of fees and other charges being deducted from members' superannuation accounts.

"Cases of financial advice fees being charged without the provision of the relevant services have recently been the subject of inquiry... we have identified a range of industry practices in relation to trustee oversight, many of which fall below the standard we expect," the regulators said in a joint statement.

"All trustees must have in place strong governance, risk management and oversight processes to ensure that only authorised and appropriate fees and other charges are deducted from members' superannuation accounts."

Read more: MorningstarASICAPRAGlobal Investor Experience StudyGrant Kennaway
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