24th September 2014 by The Harried House Hunter
What is the Money Advice Service?
The Money Advice Service (MAS) was set up by the Government in 2010 to provide assistance to the general public on financial matters. Its central aims are to improve the public’s knowledge of financial matters and to make them better equipped to manage their finances. It provides guidance via telephone, via its website and face-to-face. It has conducted a high-profile television advertising campaign using the slogan ‘What does MA think?’
Financial adviser criticism of the MAS
However, the MAS has attracted a great deal of criticism in its short life. Its annual budget of around £80 million is paid, not via general taxation, but via levies on firms authorised by the financial regulator, the Financial Conduct Authority (FCA). This makes the Service extremely unpopular amongst the UK’s financial advisers. Given that the MAS could be described as facilitating a do-it-yourself approach to organising one’s financial affairs, advisers are in effect being asked to subsidise a competitor. They have also taken issue with the use of the word ‘advice’ in the organisation’s title, as the type of service the MAS provides is not of the same nature as the advice service that would be available at your local independent financial advisory firm, even though it may meet the dictionary definition of ‘advice’. It has been suggested that Money Information Service or Money Guidance Service would be a more appropriate title.
The advisory community has also scrutinised the MAS in other ways, not always with encouraging results. In July 2011, Unbiased.co.uk, a promotional website for financial advisers, alleged that it was not delivering on previous promises regarding referring clients to financial advisers. In April 2012, a member of staff from advisory firm PanaceaIFA rang the MAS posing as a member of the general public, and established that the adviser they spoke to was unaware of the Retail Distribution Review, even though this would be introduced only nine months later and was due to deliver major changes to the financial services landscape.
Criticism from public bodies
The Treasury Select Committee (TSC) of the House of Commons described the MAS as ‘not fit for purpose’ in December 2013. It said that it was spending too much of its budget on marketing rather than service delivery; that its debt advice and money advice offerings duplicated services already available from charities and private companies; that it was insufficiently accountable to the FCA or any other body; and that some of its senior staff were earning excessive salaries. The Government will publish the results of a review into the MAS in 2015, and the TSC has decided to wait until it has had a chance to see this review before deciding whether to recommend that the MAS is abolished. However, it should be noted that the TSC is purely an advisory body and can only make policy recommendations to the Government, rather than setting policy itself.
A few days later, the National Audit Office (NAO) joined in the criticism. It noted that 97% of contacts with the MAS were made via the website, and so questioned the effectiveness of its face-to-face and telephone services, and whether it was providing an effective service to the 17% of households who do not have internet access. It also said that 50% of visitors to the site only viewed one page before leaving it, and that it had failed to establish an advice platform via smartphone services. Echoing the TSC comments that it duplicated services available from charities and private companies, its report said: “it is trusted less than MoneySavingExpert.com and Citizens Advice.”
The NAO did acknowledge though that it believed MAS’s debt advice operation was delivering value for money.
Given all of these indications from reputable public bodies, is the MAS really worth £80 million per year? It is also worthy of note that the MAS does not have performance targets in areas such as the number of people it helps to achieve their goals.
Government retirement advice initiative
A possible indication of the feelings of the Government regarding the effectiveness of the MAS came in March 2014, when pensioners were given increased flexibility as to how they accessed their retirement savings. As part of the reforms, the Government announced that all retirees would receive free advice on their pension options, and that it was making funds available to product providers to deliver this service. One might have thought that the MAS would be the obvious organisation to do this, but perhaps the Government disagrees?
The case for the MAS being a good thing
The MAS does have some level of accountability to the Government and to various bodies. Its 12-strong board is appointed by the FCA, and its Chairman and Chief Executive are personally approved by the Treasury. Its annual business plan and budget require the FCA’s approval, and it must also consult with the Government’s Department for Business, Innovation and Skills; and the FCA’s Financial Services Consumer Panel and Smaller Business Practitioner panels regarding this plan and budget.
Some 2.1 million people used the MAS during the financial year 2012/13, and a glance at its website shows that guidance is available on a wide range of financial topics, from budget planning to debt management. There is also information available on a wide range of different financial products, a comprehensive financial news service and a price comparison facility. On the face of it, this sounds like a very useful service offering, leaving aside the issues regarding access difficulties and duplication.
The future of MAS – has it got one?
As we have seen above, the MAS only came into existence in 2010, although it did inherit certain responsibilities from previous regulator the Financial Services Authority at this time; and if some people have their way, it seems it may not exist for much longer. However, it seems certain that the MAS will continue to operate in much the same way it does now until the 2015 Government review is published.