Morningstar has proposed an overhaul of fund fee transparency and disclosure as it seeks to counter criticism from the regulator over rating agencies' business models.
Outlining its response to the FCA's interim report on its asset management market study, the ratings agency said active managers should be obliged to compare their products with passives and disclose how much revenue a given fund provides to the company.
Morningstar's said the changes would tackle the "informational disadvantage" intermediaries and end investors face when selecting portfolios, for instance by showing whether economies of scale were being passed on to clients.
The FCA report, issued last November, criticised ratings agencies for their lack of coverage of passive products. The proposals by Morningstar, which increased its coverage of exchange-traded funds' earlier this year, would place the onus on asset managers to provide more information themselves.
The firm has suggested the use of "pound and pence" figures showing how much was paid in charges for a fund over a specific period compared with a passive vehicle, or showing an active fund charge as a percentage of expected return compared with a passive fund.
Morningstar head of global ratings Chris Traulsen said the disclosures would help investors "think about passives when it is sensible for them to do so," suggesting the use of a concrete figure would be "compelling".
Mr Traulsen said the firm "fully embraced" the FCA's tough stance on the industry, but added the ratings agency took issue with a number of the regulator's proposals.
He agreed fund buyers and research agencies needed better fee disclosure, but said Morningstar did not support the FCA's proposal that fund providers should estimate future transaction costs for their portfolios.
The question of how to incorporate transaction costs - charges that vary year-on-year - into a single fund fee should necessitate the use of an "all-in" figure that is backwards-looking rather than one that attempts to predict the future, Mr Traulsen suggested.
A five-year average figure of total fund costs "would give a more reasonable statement of the fund's charges," the ratings agency added.
Morningstar's response to the regulator also suggested that asset managers be forced to state how much revenue each of its funds contributes to the company's bottom line.
In a move it said would confront the perceived absence of economies of scale for investors, Morningstar said the disclosure would allow investors, the media and research agencies to challenge fund groups when revenue was growing disproportionately to performance or when fees remained static in the face of rising assets.
The ratings agency also backed the FCA's proposal for independent boards of directors for funds. It went a step further by saying these boards should produce an annual letter justifying products' charging structures.
The firm also looked to counter FCA criticism of ratings systems and best buy lists. The regulator said that while positive ratings for active funds generally meant they were better performing than their peer group, rated funds achieved "little or no" excess return above a benchmark.
Morningstar said it used the methodology applied by the FCA but extended it to include a wider data set and a longer period of time. The firm claimed it found statistically significant evidence that the average Morningstar-rated active fund beat its benchmark over rolling five-year periods.