Financial Planners are being driven from the defined benefit pension transfer market due to an inability to secure affordable professional indemnity insurance, according to the Personal Finance Society.

Eight out of ten financial advisers surveyed by the PFS who used to advise on transfers have quit the market. 

When asked why they no longer offered advice on defined benefit pension transfers, most surveyed this month said they could no longer obtain professional indemnity insurance or, if they could, it was too costly.

Just under half (40%) of advisers who still offer DB transfer advice said the price they charge to clients has increased over the past two years.

Many who had increased this cost had only marginally increased their general advice fee overall.

The majority (95%) of financial advisers surveyed said the price they pay for professional indemnity insurance had increased in the last five years.

Two thirds polled said the cost of professional indemnity insurance has increased by over 25%in the last five years with 23% reporting premiums were more than 76% more expensive than they were prior to Pension Freedoms.

Keith Richards, chief executive of the Personal Finance Society, said: “The pool of financial advisers able to offer defined benefit pension transfer advice has been shrinking at a scarily fast pace and the numbers who will have to increase the fees they charge is set to increase against a backdrop of increasing regulatory levies.

“I am sorry to say access to affordable defined benefit pension transfer advice is likely to get far worse for consumers unless we see some sensible government intervention soon and the increased risk exposure where PI cover for past DB advice has ceased will compound the already unsustainable FSCS costs for all.”

The Personal Finance Society has said the current method of funding consumer compensation is unsustainable. The professional body has called for government intervention.

Instead of consumer compensation being paid from the current patchwork of professional indemnity insurance and levies to the Financial Services Compensation Scheme, the Personal Finance Society has proposed an alternative which would combine both.