Professional indemnity (PI) insurance company Liberty Specialty Markets has stopped providing cover to businesses performing defined benefit (DB) pension transfers.
Firms that currently have PI insurance with Liberty will not lose their cover.
A spokesperson for the firm told International Adviser: “After reviewing our exposure to the Financial Conduct Authority’s (FCA) on-going pension transfer review, we have taken the difficult decision to cease offering cover for defined benefit pension transfers for any new clients for the time being.
“Our underwriting approach for existing clients remains unaltered. However, increasing our exposure to this high-risk area during this period of uncertainty would not be prudent and could ultimately have a negative impact for our clients by potentially putting the future of the account at risk.”
A real struggle
PI cover has been a thorn in the side of financial advisory firms since the UK Financial Ombudsman Service raised the compensation limit to £350,000 ($436,079, € 389,996), from the previous £150,000, effective from 1 April 2019.
It meant that PI insurance premiums increased, and financial advisers were left either paying a lot more or unable to advise on transfers.
