20th June 2012
Well, after many years of discussion, such a service exists. It is called the Money Advice Service (MAS) and was launched with great fanfare on the 4 April last year backed by a big television advertising campaign.
But just over one year later, many critics believe it has completely lost its way.
What the critics were saying
The criticism started early with much of it coming from established independent financial advisers, but now MPs and media heavy weights are joining. In some ways, criticism from IFAs was only to be expected. Some advisers felt that MAS was straying on to their turf and were deeply unhappy that the service was to be funded by a levy on the financial services industry. Some found this particularly irritating because the original proposals for the service put forward by insurance industry boss Otto Thoresen – who now runs the Association of British Insurers – envisaged half of the funding coming from the industry and half from general taxation. In this time of austerity, the Coalition opted for full industry funding instead.
Where else could you find ‘unbiased' advice?
However what really upset advisers was the fact that the television advertising blitz made much of the fact that the service was providing ‘unbiased' and ‘free' advice. The first word unbiased borrowed from the language used by IFAs to the extent that one organisation, IFA Promotion, had actually rebranded some years previously as Unbiased.co.uk.
No such thing as a free lunch
But what really galled advisers was the ‘free' boast. First advisers were paying for it, and therefore they argued, so were their clients and it is therefore not free. Second a new and extensive set of rules for financial advisers in the UK was at least partly meant to get the message across to clients that regulated advice is not free. Regulators and many advisers themselves had been arguing for years that advice had only appeared to be free because providers had paid commission.
Just as there were signs that the message was getting across, complete with a ban on commission (due to come into force at the end of this year) MAS and its advertising agency appeared to be driving a coach and horses through the argument. More than 80 irate advisers complained to the Advertising Standards Authority though their complaints were not upheld on a technical point.
Austerity measures for MAS
Perhaps these arguments would have died down, but just over six months after launch in November last year it became clear all was not well at MAS. News broke that it had placed half of its 150 staff on consultation and was reviewing its products and services as trade paper Money Marketing reported at the time. It was suggested that MAS had hired twice the staff it needed.
As part of the cuts, MAS was expected to axe its service for young people and this got the attention of ministers with Treasury minister Mark Hoban writing to MAS to express his concerns about the move.
It had also become clear that MAS had spent £250,000 on a website rebrand for its April 2011 launch, converting the Financial Services Authority's existing Money Made Clear site. It also spent £4m on the television ad campaign.
Perhaps even more seriously in April, of this year an investigation by money website This is Money found flaws in the information being given out by MAS.
The main problems listed by This is Money were as follows –
As if that is not bad enough, now the service is subject to a Treasury select committee inquiry with MPs already slating its performance to date.
Just last month, Labour MP George Mudie launched a stinging attack saying MAS was ""scrambling around" for a purpose to justify its budget and was an organisation which has "lost its direction".
Conservative MP Michael Fallon Michael Fallon said he was deeply concerned about the business, pointing out the fact that, within the entire business plan, there were only ten figures focusing on the budget and asking MAS officials "Do you share my surprise that £16m is being spent on staffing and operational costs?"
MPs are also looking at the salaries of MAS executives including the generous £350,000 package of MAS chief executive Toby Hobman.
Adviser and fund manager trade organisations used the inquiry to renew their criticisms calling for much more accountability to the industry and a value for money requirement as Citywire and Money Marketing report here.
Some made harsh comparisons with commercial sites such as Moneysavingexpert.com.
The self proclaimed expert has his say
The self proclaimed expert himself, Martin Lewis also waded in.
He told MPs the website itself was "bland, boring, unnecessary and unproductive. This narcissistic brand-building exercise needs to stop," though he is on the record saying that he supports the service in principle.
Lewis followed this up with a blog on his own website.
Is a new strategy needed?
To add to MAS's woes, there is an ongoing heated debate over strategy and tactics. Some consumer groups are suggesting that MAS needs to give consumers more direction though they use quite coded language.
The Financial Services Consumer Panel, which advises the UK financial watchdogs about the consumer interest, told MPs that MAS should ‘push regulatory boundaries' and move into providing ‘unregulated advice', giving consumers ‘information and guidance' as well as the ‘generic advice' it already provides.
Whether this would actually constitute recommending a product may be up for debate, but that is how one adviser organisation sees it.
As ftadviser.com reported recently, the Association of Independent Financial Advisers is worried that this could see MAS providing a rival service to its members but also being funded by them.
And the supporters…
MAS does have its supporters as this comment piece from veteran City journalist Anthony Hilton in the Evening Standard shows.
He writes: MAS stops short of delivering advice because it does not want to be accused of unfair competition by other financial advisers or the product providers in the industry who pay its bills. This is unsatisfactory because, though explaining finance is valuable, most customers still want to be told – indeed need to be told – what to do.
"So perhaps as the Consumer Panel suggested yesterday in a report to MPs, the time is right for the Money Advice Service to be allowed to expand its horizons. Perhaps it should be allowed to go that little bit further and become a source of advice.
"The idea will probably cause angst throughout the industry. It is perhaps not an ideal solution. But some effort surely has to be made to cut the number of unhappy financial customers."
However MAS now seems to have gathered such as range of critics and to have made so many blunders that it needs to demonstrate what it is for, and crucially how it is helping people.
It is due to give more evidence to MPs today and it might be wise not to waste the opportunity to make the case for its work and maybe even for its existence.
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