Skip to main content
Polar Insight

The intermediary problem: why broker failure is now a board issue

The FCA's move to halt regulated activity at insurance broker Anthony Jones (UK) Limited, alongside its continuing crackdown on motor finance claims intermediaries, signals a hardening supervisory stance on the middle of the distribution chain. Senior leaders at insurers, lenders and asset managers who rely on third parties to reach customers need to rethink their oversight assumptions.

The FCA has told customers of insurance broker Anthony Jones (UK) Limited to contact their underwriters directly to confirm cover, after the firm agreed on 9 July 2026 to stop carrying out any regulated activity (FCA). The intervention is administratively quiet but strategically loud. It lands in the same week the regulator reported having forced the removal or amendment of 170 misleading car finance claims adverts in June alone, taking the running total to 1,200 since January 2024 (FCA). Two very different files, one shared message: the intermediary tier is now the FCA's preferred pressure point.

That matters because the economics of UK financial services are built on delegation. Insurers write policies through brokers they do not employ. Lenders acquire redress exposure via claims companies they cannot control. When the FCA freezes a broker's permissions, the reputational and operational fallout does not stay with the broker. Policyholders are told to go upstream to the underwriter to verify whether premiums have actually reached the risk carrier (FCA). For an insurer, that is a Consumer Duty question, a complaints question, and a Financial Ombudsman question arriving simultaneously, without warning, on the back of a counterparty's failure.

The motor finance parallel sharpens the point. The joint taskforce, which pulls in the ASA, SRA and ICO alongside the FCA, has now secured 12 voluntary requirements against CMCs in the last twelve months and issued 8 alerts against unauthorised firms in June (FCA). Alison Walters, director of consumer finance at the FCA, said promotions "obscure key facts, create unnecessary pressure on consumers to sign up, or risk misleading people about their options" (FCA). Lenders are not the direct target, but they inherit the customer confusion, the inflated claim volumes, and the operational cost of triaging complaints that CMCs charge over 30% to originate (FCA).

For boards, the practical implication is a shift in how third party risk is framed. Distribution partners and claims-facing intermediaries have historically been treated as commercial relationships with a compliance overlay. The regulator is now treating them as extensions of the principal firm's conduct footprint. The appointment of Dan Lavender to the Regulatory Decisions Committee, described by RDC Chair Alison Potter as bringing "significant legal and leadership experience in relation to contentious financial services matters" (FCA), reinforces the direction of travel: contested enforcement capacity is being reinforced, not run down, even as the FCA sells its growth credentials elsewhere.

What senior leaders should do now

Three moves are worth prioritising. First, map which intermediaries carry client money or premium and stress-test what happens to customers if their permissions are suspended tomorrow. Second, review marketing oversight of any downstream firm using your brand, your redress scheme references, or your product names, because the ASA's AI-based Active Ad Monitoring system is scanning at scale (FCA). Third, ensure the board sees intermediary conduct data, not just intermediary revenue data.

The FCA is no longer distinguishing neatly between principal and agent when consumer harm crystallises. Firms that still do will find the distinction collapses under them at the worst possible moment.

Sources

What this reveals

The FCA's intervention exposes a structural weakness in how principal firms treat their distribution and claims intermediaries: as commercial counterparties governed by contract, rather than as extensions of their own conduct footprint. The failed assumption is that regulatory permission at the intermediary tier insulates the principal from downstream customer harm, complaints exposure and Consumer Duty accountability. Other insurers, lenders and asset managers may believe their onboarding due diligence and standard oversight MI are sufficient, when in reality supervisors now expect continuous, evidenced assurance over intermediary conduct. This matters because the moment of intermediary failure is precisely when the principal has no time to build the oversight record it should already have.

Questions accountable leaders should ask

  • 01If a broker or CMC in our distribution chain had its permissions frozen tomorrow, could we tell the FCA within 48 hours which customers are affected, whether premiums or fees reached us, and how we would communicate?
  • 02What evidence do we hold that our intermediaries' customer-facing conduct, financial promotions and complaints handling actually meet Consumer Duty standards, as opposed to contractually committing to do so?
  • 03Have we mapped which intermediaries carry concentration risk, either by volume, by customer vulnerability profile, or by proximity to active FCA supervisory themes such as motor finance claims?
  • 04Does our board receive intermediary conduct MI at a granularity that would let a non-executive challenge whether a specific counterparty is drifting, or only aggregate assurance that the framework exists?
  • 05Who inside the firm owns the scenario where an intermediary fails, and has that ownership been tested against a live rehearsal rather than a policy document?

What accountable leaders should do now

  1. 1Commission a rapid stocktake of intermediary exposure that ranks distribution and claims counterparties by customer volume, conduct risk indicators and supervisory sensitivity, not just commercial contribution.
  2. 2Pressure-test the assumption that current oversight MI would satisfy a supervisor after a counterparty failure, by asking what the firm could evidence in the first 72 hours of an intervention.
  3. 3Rebuild the intermediary risk framework so it treats third parties as extensions of the firm's conduct footprint, with named accountability under SM&CR and Consumer Duty rather than sitting inside procurement or vendor management.
  4. 4Run a tabletop exercise on a specific intermediary failure scenario, covering customer communications, complaints triage, Ombudsman exposure, and regulator notifications, and use the gaps to reset board reporting.
  5. 5Set an expectation with the board that intermediary conduct is a standing agenda item, not an annual assurance paper, and align it explicitly to the firm's Consumer Duty outcomes reporting.

Explore the practical guide

This guide sets out how senior leaders at FCA regulated firms should identify, assess and manage stakeholder risk in a way that stands up to supervisory scrutiny. After reading, you will know how to structure a stakeholder risk framework that connects to Consumer Duty, SM&CR accountability and board-level reporting.

Read the guide

Where internal confidence may exceed external evidence

Polar Insight helps leadership teams test critical assumptions against stakeholder, market, regulatory, and operational reality before risk compounds.

Explore Stakeholder Proximity

Related insights

Dunne and Fenech: the Tribunal recalibrates FCA penalties, not principles

The Upper Tribunal upheld the FCA's bans on two individuals central to a £126m defined benefit pension transfer scandal, but cut their fines after finding only 18% of advice was unsuitable, not all of it. For senior leaders, the ruling clarifies how enforcement outcomes will be tested on evidence, and reinforces that dishonesty toward the regulator remains a career-ending line.

Vertical integration in insurance: the FCA puts ownership structures on notice

The FCA's new insurance director has written to firms whose vertically integrated business models create heightened conflicts of interest, warning that disclosure alone is insufficient. For boards of insurers, brokers and their private equity backers, the letter marks a shift from theoretical concern to active supervisory pressure on ownership design itself.

Prosper's collapse: when the appointed representative bill comes due

Prosper Capital LLP has entered creditors' voluntary liquidation after the Financial Ombudsman upheld complaints against property investments sold by its appointed representative, Crowd2Let Capital. The failure crystallises a pattern regulators have been signalling for two years: principals cannot outsource accountability, and boards that treat AR oversight as a compliance formality are underwriting a contingent liability.

Stakeholder Signals

Consequential developments in financial services and other regulated markets, with one implication for accountable leaders.