More than 30 financial advice firms have stopped offering pension transfer advice in just three months because of the cost of professional indemnity cover, according to the Personal Finance Society.
The Personal Finance Society expects the number of firms pulling out of offering pension transfer advice to further increase in the coming months as the FCA publishes final pension transfer advice rules.
A voluntary code of good practice for safeguarded and defined benefit pension transfer advice, based around a set of principle, called Pension Transfer Gold Standard, was launched in April last year by the Pension Advice Taskforce and the Personal Finance Society.
Firms can adopt and promote this standard and principles, so consumers can better understand and find good advice, and be confident they are dealing with a firm that is going beyond minimum requirements when giving financial advice.
By the end of 2019 more than 1,225 advisers had signed up to the standard but in the final three months of the year more than 30 firms had pulled out in the space of just 90 days.
The firms that deregistered for Gold Standard stated they were no longer offering pension transfer advice due to restricted access to affordable professional indemnity insurance.
Keith Richards, chief executive of the Personal Finance Society and chair of the Pensions Advice Taskforce says: “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.”