The UK's markets watchdog has proposed a suite of changes to the £7 trillion asset management industry in order to improve transparency and value for money for customers.
In a long-awaited report, the Financial Conduct Authority (FCA) said it proposed to strengthen the duty of fund managers to act in the best interests of investors.
The FCA will also require fund managers to appoint at least two independent directors to their board.
It also said it still supported the disclosure of a single, all-in fee for investors, the most controversial of the ideas proposed last November when it launched the initial review, but would consult further on the issue later in the year.
"We have listened carefully to the feedback we received in response to our report last November," FCA chief executive Andrew Bailey said in a statement.
"We have put together a comprehensive package of reforms that will make competition work better and help both retail and institutional investors to make their money work well for them," he added.
It stopped short of an immediate referral to Britain's competition authority of the market for institutional advice, but recommended the government considered bringing investment consultants under the remit of the FCA.
The FCA's November consultation paper raised hackles in the industry after it criticised asset managers for making hefty profits, and the watchdog confirmed its findings in today's final report.
"This found that price competition is weak in a number of areas of the industry," the FCA said.
"Despite a large number of firms operating in the market, the FCA's analysis found evidence of sustained, high profits over a number of years," it added.
The FCA said it also found that investors are not always clear what the objectives of funds are, and fund performance is not always reported against an appropriate benchmark.
It said it will launch a market study into investment platforms which offer a range of funds online.
