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Advisers say draft MAS reforms don’t go far enough

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

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. E L Wisty (an only twin) 19th December 2014 at 12:07 pm

    Rather ironic that this article does not make reference to the ‘elephant in the room’ – Caroline Rookes – despite the decidedly unaesthetic photo of her.

    As highlighted in the article, MAS has a number of fundamental problems; however, in my opinion, this organisation cannot begin to turn the corner until it replaces La Rookes – who has now lost all credibility.

  2. Me again, name change to Money Guidance Service, if I keep stating it, may be, just may be someone will listen. Stop confusing the consumer please.

  3. The reduction in budget is not proportionate to the reduction in staff numbers. According to these recommendations, there’ll be fewer staff but a bigger spend per head. How does that stack up?

    And I still resent being forced to pay levies towards the costs of debt counselling, which has nothing to do with my activities, which are wealth protection and accumulation.

    The MAS is largely privatisation of what the increasingly resource-starved CAB and other publicly funded debt counselling agencies have been doing for decades.

  4. What happened to that “Bonfire of Quangos”? They are set up for a temporary need at the time or over time become obsolete but 10 years later are still there collectively drawing billions. We have near 800 of them, this one needs to go.

    As has been suggested the money (tax payer it should be) should be directed to CAB. Ever looked into the waiting room window of a CAB office? Something does not add up there at all. They are full already of recent arrivals, young mothers and debt problem cases. I’ve heard nothing about how they are meant to cope or be trained?

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