PI impacts access to pension transfer advice
Publication date:
04 December 2020
Last updated:
25 February 2025
Author(s):
Personal Finance Society
A poll of 94 financial advisers with regulatory permission to advise on pension transfers has shown how the soaring cost of professional indemnity insurance is impacting consumers ability to access pension freedoms.
A survey of Personal Finance Society members showed the cost of their professional indemnity insurance cover has increased for almost 95 per cent of financial advisers qualified to advise on pension transfers.
Almost four out of 10 financial advisers stated the cost of their professional indemnity insurance premiums had increased by between 20 per cent and 50 per cent on the amount they paid a year ago, while 36 per cent stated the price they pay for cover had soared by more than 50 per cent.
Half of the financial advisers polled in October by the Personal Finance Society said they had to pass the increased cost of professional indemnity insurance premiums onto their clients.
Keith Richards, chief executive of the Personal Finance Society, said: “The hardening of the professional indemnity insurance market is impacting the availability of advice to consumers, who must take regulated advice to be able to exercise their rights under pension freedoms for defined benefits pension transfers.
“The current method of funding consumer compensation is also unsustainable and we are again calling for government intervention for a complete overhaul before there is no alternative as both consumer protection and market sustainability continues to be negatively impacted.
“To achieve this, we must remove the volatility and uncertainty around the availability of professional indemnity insurance, the consequential impact and pressure on the Financial Services Compensation Scheme and its levy.
“This can be achieved by pooling the cost of compensation at the highest level: funds under management. This would mean a much wider, fairer, and sustainable solution for modernising the regulatory, consumer education and compensation funding structure to ensure consumers don’t lose out on access to advice, are compensated when things unexpectantly go wrong and ultimately have greater trust in our regulated sectors at a time when the public are facing uncertainty and a significant and growing risk from scams.”
This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.
