I ran some tests on a local test site and I was unable to reproduce such a problem.
You didn't provide debug info (hidden link) so I can't see what plugins you are using, but I found no problems uploading featured images as a subscriber using front-end Toolset Forms when Access is not active.
When Access is active, a subscriber needs permission to see the form, but once granted they can also upload featured images without problem.
I suspect that you either have code from another plugin or theme which is conflicting, or you are using Access and the settings you have applied are preventing subscribers from publishing featured images.
Can we first eliminate any conflicts before proceeding?
Could you please disable all non-Toolset plugins and switch theme to twentynineteen then try again. If the issue disappears then it should be possible to determine the source of any conflict by a process of elimination.
If that didn't help, are you using Access? Disable Access. Does that resolve the problem?
If so it would be a question of your settings, but let me know how you proceed with the above.
I can't really tell what I'm looking at in your screen recording, you move quickly and I can't tell what changes from the start to the end where the error appears.
First, did you try the conflict test I described above, testing with all non-Toolset plugins disabled and switching to the twentynineteen theme.
If not, please do so before we go any further.
If you did then please share a screenshot of your form settings with me.
Hi Nigel, sorry for late response, I was away from project, and now I'm back again.
Seems that problem is solved. I have talked today with hosting partner (wpengine.com) , I was not able to upload images to Media Library from user or post frontend forms. They have told me that this is probably due to non https links in frontend, they have switched front end to https and suddenly image upload from post and user forms are working.
Please, can we leave opened this thread a bit more, I will test this and give final feedback if really everything is working. Thanks for everything.
PS: just one question non related to this thread, if it is possible. If I create a new custom roles with Access, for example Brokers and Affiliates, can I create a subrole for Affiliates (for example Lenders and Bankers, SBA Lenders, ...) or am I able to create only one level of roles
