Transfer activity dropped by almost a quarter in April, falling to a rate of 55 in every 10,000 members transferring per year, the lowest level since September last year, according to the XPS Transfer Watch Transfer Activity Index.

The group also recorded an increase in the XPS Red Flag Index, which identified at least one warning sign of a potential scam or the potential for poor outcomes in 59 per cent of transfers processed during the period, compared to 52 per cent in March.

The number of red flags recorded by the index had been falling prior to this, with a rate of 58 per cent recorded in February, following the record high of 76 per cent in December.

The Transfer Value Index, meanwhile, has remained largely unchanged over the past month, increasing slightly from £246,000 in March to £247,000 in April, having now recovered from the "sharp fall" seen in February.

Commenting on the findings, XPS partner, Mark Barlow, said: “It is disappointing to see an increase in the Red Flag Index after continual falls for the last three months.

"With warning signs of poor member outcomes remaining so high, we welcome the FCA’s decision to extend their thematic review with the aim of driving up standards of pensions advice.

“In the meantime, we continue to work with trustees and employers to ensure their members are able to access high quality advice.”

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