More than 30 financial advisory firms have quit the pension transfer advice market in the past three months after struggling to find professional indemnity insurance cover, the Personal Finance Society has said.
The professional body says that more than 1,225 advisers signed up in 2019 to the Pension Transfer Gold Standard it supports but in the final three months of the year more than 30 firms pulled out and exited the market.
The Personal Finance Society said it expects the number of firms dropping pension transfer advice to increase in the coming months as the FCA publishes final pension transfer advice rules.
The PFS Pension Transfer Gold Standard was launched in April last year by the Pension Advice Taskforce and the Personal Finance Society. It is a voluntary code of practice for safeguarded and defined benefit pension transfer advice.
The firms that deregistered from the Gold Standard stated they were “no longer offering pension transfer advice due to restricted access to affordable professional indemnity insurance,” said the PFS.
Keith Richards, chief executive of the Personal Finance Society and chair of the Pensions Advice Taskforce, said: “We expect the regulator’s new rules to further impact the availability for advice on defined benefit pensions in part due to the rule changes, but mainly because of the severe hardening of the professional indemnity insurance market making it hard for advisers to get cover.
“The Gold Standard was designed as a consumer guide and while we are delighted to see so many firms align and promote the principles, weekly reports from members regarding the cost or restrictions of available professional indemnity insurance means a growing proportion of the public are being denied the right of pension freedom and choice.
“We are equally concerned at the level of increased financial exposure the retraction of the PII market continues to place on the profession and the increasing noise from the vultures with Ambulance lights already flashing.”
The PFS is lobbying the Treasury and the FCA over the need for a review of professional indemnity insurance.
The profession body has also called on members to report poor practice at claims management companies, which it will share with the FCA.