The Partner Standard
Most insurance manufacturers can produce the agreement that governs each distribution and outsourcing relationship. Few can show that the agreement carries the operational weight the Consumer Duty requires. TR24/2 found generic Terms of Business Agreements masquerading as co-manufacturing arrangements, MI on distributor remuneration too thin to test fair value, and limited evidence that manufacturers were assessing distributor activity. The GAP intervention exposed the consequence: products sold through chains the manufacturer could not see and would not have stopped. The contract was signed. The standard was not enforced.
The structural move is to make the partner standard operational rather than contractual: clauses that compel the data the firm needs, audit rights that are actually exercised, escalation thresholds with named consequences, and exit mechanics that protect the customer mid-relationship.
Duty-grade clauses, not generic TOBAsDistribution and outsourcing agreements include the specific operational provisions the Duty requires of each partner type — target market monitoring obligations and reporting cadence for brokers and comparison sites; fair value data feeds and remuneration disclosure for MGAs and panel intermediaries; complaint root-cause sharing and vulnerability handling standards for claims TPAs and loss assessors; repair quality and customer-treatment indicators for motor-garage networks; delegated authority breach reporting and target market enforcement for binder partners. Generic TOBAs are refreshed onto Duty-grade templates with PROD 4 and TR24/2 alignment, and new partner onboarding cannot complete without the equivalent clauses. The design test: for any partner relationship the firm holds, can it identify the specific clauses that bind the partner to the Duty outcomes the firm is itself accountable for, or is the relationship governed by a generic agreement TR24/2 would now flag?
Data flow, audit rights, and escalation thresholds that operateContractual data rights are matched by operational data feeds the firm actually receives — broker target market and persistency MI, MGA underwriting and complaint data, TPA claims handling time and outcome metrics, comparison-site lead-quality feeds, motor-garage repair quality scores — at a defined cadence and reconciled into the firm's own outcome MI. Audit rights are exercised on a documented cycle, not held in reserve. Escalation thresholds are named in advance for each partner type with breach consequences explicit: remediation, contract amendment, reduction of authority, panel removal, or termination. The design test: across the firm's panel, what proportion of partners have generated a threshold breach in the past three years, and what proportion of those breaches led to documented action versus continued monitoring?
Exit and substitution that protect the customerFor each material partner, the firm has identified the customer-protective exit path — the alternative MGA capacity, claims TPA capability, broker channel, or motor garage network that can absorb the relationship's customers without breaks in cover, mid-claim handover failure, or loss of vulnerable customer support history. PS21/3 operational resilience requires substitutability to be tested rather than asserted. Exit triggers are named in the contract; data portability and customer notification mechanics are defined; transitional service obligations bind the outgoing partner. The design test: for each material partner, can the firm describe and evidence the exit it would execute if the relationship became inconsistent with Duty outcomes — and has it tested any element of that exit in the last twelve months?
Distribution and outsourcing agreements across the panel have been mapped against TR24/2 and PROD 4 expectations, with generic TOBAs identified, refreshed, or scheduled for refresh — and new partner onboarding cannot complete without Duty-grade clauses covering target market, fair value MI, complaint sharing, and audit rights.
Contractually committed data feeds — broker target market and remuneration data, MGA underwriting and complaint MI, claims TPA outcome and vulnerability handling data, motor-garage repair quality scores — are received at defined cadence, reconciled into the firm's outcome MI, and the firm can name the partners whose data flow is in arrears.
Audit rights have been exercised on a documented cycle within the past twelve months for material partners, with audit findings tracked through to remediation or escalation; the firm can produce, for the panel, the audit cycle status and the open finding population.
For each material partner, the firm has documented the exit path, tested at least one element of it within the past twelve months under PS21/3 substitutability discipline, and named the alternative capacity that would absorb customers without break in cover or mid-claim disruption.
A motor and home insurer rebuilt its broker and comparison-site oversight after the GAP intervention exposed gaps the existing TOBAs did not address. The previous arrangement had relied on annual broker self-attestation against TOBA terms and a sample audit cycle that had not run in three years on most accounts. The redesigned partner standard imposed monthly data feeds covering target market hit rate, post-sale cancellation patterns, complaint root cause categorisation, and remuneration data attributed to channel and sub-distribution; pre-defined breach thresholds tied to each indicator with named escalation owners; and a refreshed audit cycle with at least one full audit per material partner per year. Within the first twelve months, two comparison-site channels were removed from the panel after target market drift indicators breached threshold and the partners could not evidence remediation, and three broker accounts had remuneration arrangements renegotiated where the data flow showed the existing structure was not consistent with fair value at cohort level. The TOBAs had not changed in kind. The standard the firm now enforced through them had.
A composite insurer with delegated authority arrangements across an MGA panel and a claims TPA network responded to TR24/2 by redesigning its delegated authority oversight framework. The previous arrangement had treated the binder agreement as the standard, with limited data flow on complaints, fair treatment outcomes, or vulnerability handling between binder reviews. The redesigned framework added Duty-grade schedules covering MGA target market policing data, complaint root cause sharing, vulnerability flag handover, and delegated underwriting decisions where exposure to outside-target-market customers crossed defined thresholds. For the claims TPA network, the framework added monthly outcome MI on claims handling time, fair-treatment scores, vulnerability handling consistency, and complaint upheld rate at FOS, plus a tested substitution path identifying which of the panel TPAs could absorb the volumes if any one had to be exited. Two MGAs subsequently had delegated authority reduced after threshold breaches on target market drift and complaint upheld rate; one TPA had a structured remediation plan with quarterly milestone tests; and the substitution test confirmed two transitions were operationally executable within sixty days, satisfying PS21/3 substitutability evidence the partner standard now embedded.
- Common failure modes
The most common failure mode is the TOBA-as-standard: a generic agreement signed at onboarding, never refreshed, treated as evidence the partner meets Duty obligations. TR24/2 named this directly — agreements that did not reflect the joint manufacturer-distributor responsibility PROD 4 imposes. A second is data rights without data flow: the contract grants access to MI, but no schedule defines what data, at what cadence, in what format, with what reconciliation, and the firm has not pulled it in twelve months. A third is audit rights without audit: rights exercised at onboarding and never since, despite changes in product, channel, or partner ownership. The firm has the right; it does not have the practice. A fourth is the delegated authority blind spot — underwriting, pricing, and claims decisions made by the MGA or TPA without manufacturer-side oversight of how target market is policed and how vulnerability is handled. A fifth is escalation without consequence: thresholds defined in MI, breaches recorded, and the response cycle is monitoring, not action. The Duty standard is enforced by the action that follows the threshold. A sixth is the exit-impossible relationship — a partner whose operational entanglement is so deep the firm cannot terminate without harming customers mid-claim or mid-policy, which is itself a Duty exposure the partner standard is meant to prevent. PS21/3 places exit-and-substitution capability in operational resilience scope precisely so this position is not reached.