The professional body says that rising insurance premiums and restricted cover are causing firms to “turn away clients” needing DB pension transfer advice.
The PFS says its new evidence from members suggests that some are also facing a “growing barrage of questions” when trying to obtain cover and seeing long delays in receiving quotes.
Brokers are blaming the shrinking number of PI insurers causing the remaining providers to struggle to swiftly process applications, says the body.
According to the PFS:
• One financial advice firm has revealed how their PI premiums leapt from £3,700 in 2009 to £45,000 in 2019.
• Another adviser stated they went from a PI cost in 2017 of £22,736 to the best quote they could obtain for 2018 being £112,000.
• A Scotland-based advice firm experienced a threefold increase to professional indemnity insurance premiums in January plus the level of cover for future DB transfers was restricted to £160,000 and not the full Financial Ombudsman Service limit.
• A Surrey-based adviser saw a 47% increase in his PI premium at renewal
One adviser told the PFS: “The FCA are quick to make changes, slow to undo the damage those changes inflict on an already beleaguered sector.”
Keith Richards, chief executive of the Personal Finance Society, said: “Financial advisers who have never had a single complaint made against them are being frozen out of the defined benefit pension transfer market because of PI premium hikes and restrictions on cover.
“Problems with PI cover are causing financial advisers to exit the defined benefit pension transfer market and limiting the public’s ability to access the financial advice they need to exercise pension freedoms.
“We are sharing this evidence with the FCA and HM Treasury as part of our renewed calls for an alternative to the current professional indemnity insurance market and Financial Services Compensation Scheme compensation scheme levy."