Competitor in lather out of bounds having caught obstacle (7)
I believe the answer is:
athlete
'competitor' is the definition.
(competitor in athletics events)
'lather out of bounds having caught obstacle' is the wordplay.
'out of bounds' means to look at the middle letters (the bounds or edges of the word are removed).
'having caught' is an insertion indicator.
'obstacle' becomes 'let' ('let' could historically mean an obstruction).
The centre of 'lather' is 'athe'.
'athe' placed around 'let' is 'ATHLETE'.
'in' acts as a link.
(Other definitions for athlete that I've seen before include "fine physical specimen" , "the hare that lost, say" , "Track eventer" , "gymnast, maybe" , "One who's good at sport" .)