An advice firm which had clients in the British Steel Pension Scheme has seen its professional indemnity insurance premiums increase tenfold and its excess for defined benefit transfers go up to £100,000.
The firm, which wished to remain anonymous, contacted Keith Richards, the chief executive of the Personal Finance Society, after being told by its insurer of seven years that it would no longer be given cover.
Mr Richards said the firm eventually found cover on worse terms but he said the case highlighted a wider problem facing financial advisers.
He said: "Those with British Steel pensions were sent into the market in very untimely circumstances and some advisers acted in good faith and guided those consumers and now feel themselves to be victims.
"Anyone involved in British Steel transfers is treated with the same brush so there are plenty saying that although I feel it is my duty to help those people, I won't.
"Some advisers are now saying 'I really wish I hadn't been involved'."
The restructuring of the British Steel Pension Scheme took place in order to prevent the steelworks in Port Talbot from closing down.
Around 130,000 steelworkers had to choose to move their DB pension pots to a new plan being created, BSPS II, or stay in the current fund, which would be moved to the Pension Protection Fund (PPF), by 22 December.
Of the total members, 43,000 were deferred, which meant they could transfer out but had to seek advice in order to do so.
Mr Richards said this was one of the "unintended consequences" of the pension freedom reforms of 2015 and one that would ultimately hit consumers who would either have to pay more for advice, or struggle to access at all.
He also pointed out that reviewing the PI market was one of the recommendations of the Financial Advice Market Review.
Late last year the Financial Conduct Authority said it would not be taking action on PI insurance after a review, because doing so would probably push premiums up even further.
Instead the FCA is looking at alternative ways of addressing the shortcomings of the PI market, such as advisers leaving money in trust or taking out a surety bond.
But Mr Richards said: "Any suggestion that provides a solution is welcome but this would not provide a solution in every case."
He said the size of pension pots currently being transferred out of DB schemes was such that advisers would have to set huge sums of money aside if they didn't want to be "completely unprotected".
damian.fantato@ft.com
