Advisers have called for an independent review of the Money Advice Service to go further after it recommended sweeping job cuts and cost reduction measures.
A draft copy of the Treasury-commissioned review, led by former FSA consumer director Christine Farnish and launched in April, recommends cutting full-time staff from 130 to 50, and reducing the MAS budget from £81.1m to between £50m and £65m.
According to The Telegraph, the report says the biggest cuts should be felt by the “money advice” arm of the organisation, with the division that focuses on debt management spared.
It also suggests moving the head office out of central London to further lower running costs.
The report says firms in the utilities sector have agreed to contribute £2m to the MAS budget this year, with a view to increasing their contribution in the future.
But it says that personal finance media and charities are already providing information being offered by the MAS.
It says: “There is a high degree of duplication between the MAS and other websites which offer content on financial issues.
“We question whether a body like the MAS…should even seek to compete with the wide range of other bodies which already have trusted brands and extensive consumer reach. It still has an important job to do but change is needed.”
Advisers argue more of the MAS budget should be diverted to Citizens Advice, which will deliver the face-to-face aspect of the at-retirement guidance service from April.
Facts & Figures: Chartered Financial Planners managing director Simon Webster says: “Cutting the MAS’ budget by £30m would still make it too expensive for what it delivers.
“I remain convinced that if we gave the MAS budget to Citizens Advice, we would have a much leaner and more effective service. I have never seen the value of the MAS and believe it should be scrapped. An independent review saying it is costing too much just underlines the point the industry has been making for years.”
Clay Rogers & Partners managing director Mark Rogers says: “The public does need help with debt advice, but the MAS budget would be better spent on Citizens Advice than on a quango without a real purpose.”
Penguin Wealth certified financial planner Craig Palfrey adds: “The MAS absolutely needs to move offices, as it baffles me that these kind of organisations are set up in London where rents are most expensive.”
The MAS has been under pressure from Treasury select committee chair Andrew Tyrie and was overlooked for delivering the Government’s flagship pensions guidance service in October.
However, the Treasury has previously ruled out scrapping MAS entirely. Tyrie has argued the Farnish review should be able to consider MAS’ future as a statutory body.
In December 2013, the Treasury select sub-committee published the findings of a year-long inquiry into the MAS, which concluded it was “not fit for purpose” but granted it a “stay of execution” subject to an independent review.
MAS under the microscope
October 2014: Treasury axes the MAS from delivering the guidance guarantee
April 2014: Treasury launches independent review of the MAS
December 2013: Treasury select sub-committee brands MAS “not fit for purpose” in its review of the organisation’s effectiveness
March 2012: MPs urge the Government to review then MAS chief executive Tony Hobman’s £350,000 salary
March 2012: Money Marketing reveals the Treasury select sub-committee is to launch an inquiry into the MAS