While the Ospreys did initially offer the 28-year-old an improved contract offer in the hope he would stay at the Liberty Stadium, the Welsh region's financial troubles have meant they can no longer afford to keep Bennett at the club.
And while Ospreys forwards coach Jonathan Humphreys admits Bennett would be more than welcome back in theory, he revealed the finances were not available.
"We'd have loved to have kept Huw before this, but the simple fact is that financially we can't," said Humphreys.
"We certainly don't have the finance. That's unfortunate, but it's the case."