"While that is not great for the firms that are no longer operating in the market, it’s a much better outcome for consumers because they are now able to feel more confident about the firms that they need to go to for that kind of advice," she said.
Though the regulator has acknowledged issues around PII for advice firms and is currently considering solutions to this problem such as third party audits of advice which should reassure insurers of the quality of the advice given.
The report stated one solution to the advice vacuum could be for schemes to appoint their own advisers for members to use.
This would allow members to source more affordable advice and the due diligence carried out by the scheme could provide reassurance as to the quality of advice which is being provided.
The report stated: “The scheme-appointed market is continuing to grow and this will in part help to reduce the advice gap. But there is no doubt that more needs to be done to revive the wider advice market in this space.”
As part of the research, LCP interviewed seven scheme-appointed IFA firms and found the firms were seeing a growth in business, but arrangements varied from scheme to scheme.
For example, some schemes made advice available free of charge to members, whereas in others the scheme paid for the set-up of the arrangement and members then paid the ‘marginal’ cost of providing advice.
But advisers said access to PI insurance and the approach of the regulators would need to change for them to return to, or even remain in, the market.
Steve Webb, partner at LCP said: “It is becoming increasingly difficult for members to source affordable transfer advice and this means that schemes and regulators need to do more.
“Growing numbers of pension schemes are now teaming up with one or more carefully selected advice firms to offer free or subsidised advice on pension transfers and wider pension issues.
"Given the challenges which members are facing, the pressure on trustees to do more to support members will only grow”.
LCP had previously called on trustees to work more closely with advisers after it found last year a mere 4 per cent of eligible advisers had been appointed by a scheme.
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