Broker fined £250,000 after FOI reveals S166 bill

A single Financial Conduct Authority investigation into an insurance intermediary cost the industry roughly £257,940 during the 2025/26 financial year. A Freedom of Information request by Insurance Age revealed that only one S166 order was issued to a broker or insurer that completed within the specified timeframe.

Costs of an S166 Investigation

The FCA uses an S166 order to compel a firm to pay for an independent review when regulators have concerns about specific activities or need further analysis. Essentially, the regulator hires a third‑party “skilled person” to examine the firm’s operations.

The total bill for the single probe was £257,940. The report notes that the investigation may have stretched over several years, meaning the costs were likely front‑loaded by the firm being investigated.

Under the powers granted by the Financial Services and Markets Act 2000, the regulator can demand that a firm pay for the review, including the costs of the skilled person.

Despite the significant sum, the total number of S166 investigations completed by the regulator in this sector remains low. The data shows that while the regulator has the power to intervene, the number of cases actually reaching completion in a given year is minimal.

It is difficult to gauge the full scale of these costs because the FCA does not publish a running total of open or ongoing S166 orders. This lack of transparency means the industry pays for these reviews quietly, without a centralized public record of the active workload.

What the Data Shows

The sheer volume of S166 investigations has not kept pace with the number of firms in the market. This suggests that while the regulator has the authority to intervene, it is selective in its approach. The single case in 2025/26 represents a very small fraction of the total number of active insurance intermediaries operating across the UK.

The cost of a single investigation, often running into hundreds of thousands of pounds, serves as a financial deterrent. Firms must weigh the cost of an independent review against the potential reputational and regulatory damage of an investigation.

Given the financial stakes and the relatively low number of cases, firms are likely treating S166 orders as a rare but severe escalation in regulatory scrutiny rather than a routine part of business compliance.

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Beyond the S166 setting, the wider insurance market is experiencing a series of strategic moves that illustrate the sector’s dynamism. Partners& recently acquired the Borehamwood‑based chartered broker Chaseside Insurance Solutions, a transaction that expands its distribution footprint and adds specialised underwriting capabilities.

Wakam UK has announced an ambitious growth plan that targets a gross written premium of £370 million by 2027. The firm’s commitment to investing in partner propositions and operational capabilities signals confidence in the broker and MGA ecosystem, even as regulatory costs remain a consideration for all participants.

Lloyd’s reported an improvement in its underwriting result for the first half of the year, cutting its combined ratio to 90.8 percent. While the market softened overall, the stronger ratio demonstrates that insurers are finding ways to protect profitability amid shifting demand.

The FCA’s broader regulatory agenda is also evolving. In a recent appearance before the House of Lords Committee, executive director David Geale emphasized that the Consumer Duty has “teeth” and is delivering better outcomes for customers. This reinforces the regulator’s willingness to intervene when consumer protection is at risk, adding another layer of oversight that firms must anticipate.

On the partnership front, WTW secured a multi‑year deal to become the official insurance partner of the Barclays Women’s Super League and WSL2. Such high‑profile sponsorships underline the importance of brand visibility for insurers seeking to differentiate themselves in a competitive marketplace.

Aviva’s leader Dave Martin outlined a strategic push toward the corporate insurance segment after recent expansions in digital, SME, and mid‑market lines. The move reflects a broader trend of insurers seeking higher‑value segments to offset cost pressures, including those associated with regulatory reviews.

Specialist underwriting agency Verve Risk Services launched a new financial institutions team, extending its mid‑market focus and showing the sector’s appetite for niche expertise. This development illustrates how firms are diversifying product lines while handling the same regulatory environment that can trigger S166 orders.

Geo’s Renovation Underwriting announced a streamlined pricing and binding process for private‑client renovation risks with premiums below £3,000. By automating approval for low‑value risks, the company reduces manual underwriting workload, freeing resources that might otherwise be diverted to address regulatory compliance tasks.

Collectively, these industry actions provide context for the financial impact of an S166 investigation. While the direct cost of a single skilled‑person review is notable, firms are simultaneously investing in acquisitions, growth initiatives, technology, and partnership programmes to bolster resilience. The balance between proactive market development and the potential for costly regulatory intervention shapes strategic decision‑making across the insurance intermediary setting.