The Personal Finance Society say Financial Advisers are leaving the Defined Benefit Pension Transfer market in their droves due to the lack of affordable professional indemnity cover.
The Underwriters for DB Pension Transfer PI cover have been spooked by the risk of advisers giving bad advice to their clients who are looking to transfer out of their DB Pension schemes, as the FCA clamps down on poor advice which has led to people to be financially worse off in retirement.
The PI premiums have now become so unaffordable that many advisers have stopping giving Defined Benefit Pension Transfer advice altogether. Many advisers have been completely unable to get PI cover at all. The Personal Finance Society recently announced that over 30 advisers had pulled out of their Pension Transfer Gold Standard initiative in the last few months due to the lack of affordable PI cover.
The problem has been compounded by the recent British Steel Pension Transfer fiasco, that left many steel workers out of pocket after receiving bad advice. Many of whom are now seeking compensation from the Financial Services Compensation Scheme, who have paid out nearly £32,500 per steelworker over bad pension transfer advice from a firm that is no longer trading.
Yesterday the Financial Conduct Authority wrote to CEOs of advice firms urging them to dissuade clients from transferring out of defined benefit pension schemes, citing that there is still too much advice that is not up to an acceptable standard.
It is clear that it is going to be a turbulent year for Defined Benefit Pension Transfer advisers.
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Further Reading:
FT Adviser: PI cover forces 30 firms to exit DB transfer market
The Times: City watchdog takes aim at pension advisers over final salary transfers