Thistle Initiatives’ Partner, Nikki Bennett, explores the FCA’s inaugural Insurance Regulatory Priorities report and its implications for firms.
The FCA's publication of its inaugural Insurance Regulatory Priorities report on 24 February 2026 confirmed something that many in the market have suspected for some time: Consumer Duty is no longer just a compliance framework. It is the lens through which the FCA now supervises the entire insurance sector. For MGAs and delegated authority operators, the implications are sharper than they might first appear.
Cast your mind back to the regulatory landscape of five years ago. The FCA's primary tool for driving change in insurance was market-wide rule-writing, new ICOBS requirements, price-walking rules, and GAP insurance interventions. The industry received a rule, implemented it, and compliance was largely a technical exercise, often driven by the compliance function.
That model is over.
Sarah Pritchard, the FCA's Deputy CEO, made this explicit at the ABI Annual Conference earlier this month: "We do not believe we need any new market-wide interventions to drive positive progress. We will achieve our aim of good consumer outcomes and innovative markets through the Duty."
The new Regulatory Priorities report reinforces this. Across all four of its 2026 priorities claims handling, access to insurance, growth and innovation, and regulatory simplification- Consumer Duty is the common thread. Firms are not being given new rules to follow. They are being held accountable for the outcomes their business models produce.
For MGAs and delegated authority operators, this is a fundamentally different compliance challenge. Rules can be implemented once and reviewed periodically. Outcomes must be monitored continuously, analysed and evidenced thoroughly, and reported to boards who are now explicitly the FCA's intended audience.
The Which? super complaint, submitted in September 2025, accused the home and travel insurance markets of delivering poor consumer outcomes, particularly around claims handling. The FCA's response, published alongside the Regulatory Priorities report, committed to a substantial programme of supervisory and enforcement work on home and travel claims.
But the FCA's ambitions extend well beyond the Which? complaint. The Regulatory Priorities report states that the FCA will "expand its review of firms' oversight of outsourced claims processes, to include different delegated authority models and remuneration arrangements."
Read that sentence carefully. This is not a review of how insurers handle claims directly. It is a review of how principals oversee claims handling within their delegated authority arrangements and, critically, whether remuneration structures within those arrangements create conflicts that affect consumer outcomes.
This matters because the claims experience is where Consumer Duty fair value is ultimately tested. A consumer can receive a competitive premium, clear pre-sales documentation, and a smooth onboarding process, and still suffer a poor outcome if their claim is handled badly. Under Consumer Duty, a poor claims outcome is not just an operational failure. It is evidence that the product did not deliver the value it promised.
The traditional delegated authority model creates a structural tension that the FCA is now actively examining. The capacity provider (insurer) sets the product. The MGA can manufacture, co-manufacture, then distributes and often manages claims within the delegated scope. Both parties have Consumer Duty obligations, but the data, the claims outcomes, and the evidence of fair value frequently sit in different places within the distribution model, and the mechanisms for sharing that evidence are often underdeveloped.
The FCA has previously signalled, through thematic review TR24/2 on product governance, that it expects manufacturers and distributors to collaborate on Consumer Duty compliance rather than treating it as a siloed responsibility. The Regulatory Priorities report takes this expectation further. Oversight of outsourced claims processes is now an explicit supervisory priority, which means MGAs should expect the FCA to ask searching questions about how their capacity providers are monitoring claims outcomes within the delegated scope, and vice versa.
The remuneration point is equally significant. Commission structures, profit shares, and performance-related arrangements that create incentives to minimise claims spend are now squarely within the FCA's sights. If your remuneration model could create a conflict between your commercial interests and your customers' interests at the point of claim, that is a Consumer Duty problem regardless of whether the conflict is explicit or merely structural.
The FCA's expectations in this area are becoming increasingly concrete. Based on the Regulatory Priorities report and the broader Consumer Duty supervisory framework, MGAs and delegated authority operators should be able to demonstrate:
Not just claims acceptance rates, but qualitative evidence of consumer experience, including complaint patterns, time to settlement, and consumer understanding of decisions. The FCA's own General Insurance Value Measures data, published in December 2025, showed persistent variation in claims acceptance rates across home insurance firms. Unexplained variation is a supervisory red flag.
Documented processes for how claims handling within the delegated scope is overseen by the capacity provider, including escalation procedures, audit rights, and regular reporting on claims outcomes.
A clear analysis of whether performance-related arrangements create conflicts at the point of claim, and evidence that those conflicts have been identified, assessed, and mitigated.
The FCA has been explicit that Regulatory Priorities reports are addressed to boards and chief executives. MGAs whose boards are not receiving regular reporting on claims outcomes and Consumer Duty compliance are already behind.
The replacement of 40+ portfolio letters with nine Regulatory Priorities reports is more than an administrative simplification. It signals a shift from the FCA telling firms what to do to the FCA expecting firms to know what to do and holding them accountable when they don't.
The firms that will attract supervisory attention are not necessarily those with the worst outcomes. They are the firms that cannot demonstrate they have considered their obligations, monitored their performance, and acted where they found shortcomings. Evidence of process matters as much as evidence of outcome.
For MGAs and delegated authority operators, the message from the FCA in 2026 is clear: the claims experience is where your Consumer Duty obligations are most visibly tested. The FCA is watching, and it is expanding the scope of that scrutiny to include the structures and incentives that sit behind the claims process, not just the process itself.
If you haven't recently reviewed your claims oversight framework, your remuneration arrangements, and your board-level Consumer Duty reporting, now is the time to do so.
Our team provides compliance consultancy exclusively to insurance intermediaries, MGAs, brokers, networks and appointed representatives. If you'd like to discuss what the FCA's 2026 priorities mean for your delegated authority arrangements, contact me.
Nikki Bennett has re-joined Thistle Initiatives as a Partner in the Insurance team, working alongside Matthew Williamson. Formerly Managing Director at UKGI, she brings extensive expertise in Delegated Authority markets, MGAs, InsurTech and product development, with a proven record of delivering practical, solutions-driven outcomes for insurance firms. Nikki also continues to serve as a Director at the Association of Professional Compliance Consultants (APCC).