The professional body opposes the Financial Conduct Authority's proposed ban on contingent charging, arguing it is not the method of charging in itself which leads to poor pension transfer advice.
The comments were made in response to the regulator's consultation on pension transfer advice and its proposals to ban contingent charging.
Keith Richards, chief executive of the Personal Finance Society, said: "We agree the existence of contingent charging creates an apparent conflict of interest but from talking to our own members we know the majority of firms are managing this potential conflict carefully and properly."
The PFS boss said he understood the "mere appearance" of a conflict of interest had attracted criticism from politicians, which in turn had impacted public trust.
He added: "So of course it is not an issue we can ignore.
"We don’t support a ban as we are not convinced this method of charging in itself leads to poor advice but acknowledge that the FCA’s proposal to ban contingent charging has divided views among the profession and will be widely supported by politicians and consumer groups."
The warnings were of a similar tune to those highlighted by the Personal Investment Management & Financial Advice Association in its response to the consultation, in which the trade body warned a ban may not lead to higher quality pension transfer advice.
Pimfa warned to justify this change the FCA would need to raise the "evidential bar significantly higher" and suggested instead "targeted and more rigorous supervision" of the defined benefit transfer market would yield better results.
The FCA has proposed the ban on contingent charging with the exception of specific groups of consumers with certain identifiable circumstances, such as individuals suffering from serious ill-health or experiencing serious financial hardship.
But Mr Richards warned while the provision of exceptions for ill-health or lack of funds for advice might be "superficially attractive" they will cause "more problems than they solve".
He said: "Again the lack of PI insurance or likelihood of retrospective regulatory supervision should make any advice firm wary.
"There will always be grey areas about the extent of an individual’s ill-health or lack of funds for advice, and a judgement by an adviser based on the best evidence available at the time, often in a very emotionally charged context, could be called into question with the benefit of hindsight.
"As a result, we believe if there is a ban on contingent charging it is difficult to understand why grey areas would want to be created and far better for the FCA to acknowledge the consequences in terms of a lack of access to mandated advice under the pension freedoms legislation."
The PFS chief executive warned the FCA's decision to introduce a ban or not could be rendered irrelevant in the face of a lack of insurance, expensive premiums, increased excesses and growing regulatory scrutiny which he said was "driving the availability of advice for defined benefit pension transfers into extinction".
The response was an apparent deviation from the professional body's previous stance on contingent charging, which appeared to have backed a ban of the charging method for DB advice.
Mr Richards said the body's previous stance had been misinterpreted and that the PFS "has never supported a ban but did acknowledge the conflict of interest, real or perceived, especially given the regulatory starting position that a transfer would not be in most people's best interest".
In May 2018 the PFS told the regulator in response to a consultation: "With DB transfers consideration should be given to separating the initial review and recommendation via a separate charge or fee, especially given the ongoing ‘starting assumption’ that a transfer is unlikely to be in the clients’ best interests.
"In respect of other forms of advice where the starting point is the need to do something, for example make a suitable investment, contingent charging is far less of a risk but in the case of DB transfers where there is a strong possibility that a transfer is unsuitable, it is in our view inappropriate.
"As a result, we would support the suggestion raised in this paper for the FCA to introduce a ban on contingent charging."
rachel.mortimer@ft.com
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