What Credit Brokers and Lenders Must Get Right in 2026
Distribution risk is firmly back on the regulatory agenda.
For consumer credit lenders and brokers, the Financial Conduct Authority has sharpened its focus on how firms oversee introducers, brokers and third-party partners. The message is increasingly clear: firms are responsible not only for their own conduct, but for customer outcomes across the entire distribution chain.
Consumer Duty has accelerated this shift. In 2026, distribution oversight is no longer viewed as a procedural requirement — it is a core conduct and governance issue.
Shared responsibility is now a supervisory reality
The FCA expects firms to take active responsibility for the way their products are distributed and explained to customers.
Where lenders rely on brokers or introducers to originate business, they remain accountable for:
- product suitability and target market alignment,
- clarity of financial promotions and customer communications,
- affordability and application quality, and
- outcomes experienced by customers throughout the lifecycle.
For brokers, expectations are equally clear. They must ensure that the way products are presented, explained and sold supports informed customer decisions and fair outcomes.
The concept of “it sits with the other firm” carries little weight under Consumer Duty.
Motor finance has shown the risks
The ongoing issues across the motor finance sector provide a live example of how distribution chain weaknesses can create widespread exposure.
Concerns around commission structures, disclosure, affordability and historic sales practices have demonstrated how quickly issues in one part of the chain can escalate across lenders, brokers and the wider market.
The lesson for firms is straightforward: where distribution models are complex or heavily intermediated, oversight must be structured, evidenced and ongoing. Reactive monitoring is no longer sufficient.
What the FCA expects firms to evidence
Supervisory engagement increasingly focuses on how firms monitor and manage introducer and broker relationships in practice.
Key areas of scrutiny include:
- due diligence and onboarding of introducers,
- monitoring of application quality and conversion trends,
- complaint and arrears patterns by channel,
- oversight of financial promotions and customer communications, and
- intervention where poorer outcomes are identified.
The FCA expects firms to use management information to identify risk within distribution channels and to act where concerns arise. This may include enhanced monitoring, retraining, changes to remuneration structures or, in some cases, termination of relationships.
Passive oversight or reliance on contractual wording alone is unlikely to satisfy regulatory expectations.
Governance and Consumer Duty alignment
Boards and senior management should now treat distribution oversight as a standing governance item.
Consumer Duty requires firms to demonstrate that products deliver fair value and that customers are supported throughout the lifecycle. Where distribution partners influence customer understanding or behaviour, they directly affect those outcomes.
Senior management should therefore be able to clearly explain:
- how distribution partners are monitored,
- how customer outcomes are assessed across channels, and
- what action is taken where risks emerge.
If that narrative cannot be articulated clearly, it is unlikely to withstand regulatory scrutiny.
Acting before issues surface
For many firms, distribution frameworks have evolved over time and may not have been fundamentally reviewed since Consumer Duty implementation.
Now is the time to revisit them.
A proactive review of introducer oversight, MI, contractual arrangements and operational monitoring can significantly reduce the risk of future complaints, remediation or supervisory intervention. Waiting until issues appear in complaints data or FCA queries is a far less comfortable position.
How ALPH Legal & Compliance Can Support
ALPH Legal & Compliance supports lenders and brokers in strengthening distribution oversight and ensuring Consumer Duty alignment across the full customer journey.
Our support includes:
- independent reviews of broker and introducer frameworks,
- distribution chain audits and MI analysis,
- financial promotions and customer journey reviews,
- Consumer Duty and fair value assessments, and
- governance and board reporting enhancements.
As regulatory expectations continue to evolve, firms that can clearly evidence control over their distribution chains will be best positioned to manage risk and maintain regulator confidence.
To discuss how ALPH can support your firm in reviewing or strengthening its distribution oversight framework, get in touch directly.