I don't see significant structural concerns with the tactic. The biggest question would be what kind of goals are you conceding? Go back and view some of them. Look at the causes. That will be the most effective way to cut some of them out. Otherwise its just guess work.
The main possible culprits I see... you are basically defending with 3 players. The wingbacks won't help a ton and the DLP isn't a true holding player, even on Defend. The two MCs will help out some but given that they both move around a lot, you might be seeing some attacking opposition move through and get runs at goal, whether with the ball or to meet a cross. You are also playing at high tempo, which means unless you truly top class players, you will turn the ball over some. Let's say Battaglia turns it over in midfield.... you might have the BMW and wingbacks forward and unable to help out, leaving the DLP and defenders to try to snuff out the counter. Sometimes they won't be enough, especially against top Prem clubs. Look at lethal players like De Bruyne and Hazard are with space to run into.
I wouldn't worry TOO much on the average ratings. At least, I rarely do. But again, its hard without some analysis. Are they averaging 6.8 or alternating 7.5 an 6.3? That makes a big difference. When they have poor matches, why? Did they turn the ball over a bunch? That relates to skill, being pressed, tempo, lacking of options.... Did they miss defensive interventions, make a mistake, or just underperform as a whole? These are the things you have to look at and start to use that to devise solutions from a position of knowledge, not just guessing like we are.
When it comes to bigger clubs.... my guess is that while you aren't all out attacking and leaving huge gaps, you are leaving enough space that a better side can take advantage of it. And given your tempo, your players might not all but up to the task of making the right decision that quickly on a constant basis, so you turn the ball over in midfield. Again top class opposition, you may want a more conservative version of your tactic with more players back. You will lose some attacking verve, but gain defensive stability. Whether its pulling the wingbacks back a strata, or maybe making the DM or a DM or Anchor Man, then switch an MC to DLP....