The Association of Independent Financial Advisers has raised concerns about the Money Advice Service’s funding model and its accountability.
Aifa has today submitted evidence to the Treasury Select Committee’s inquiry into the Money Advice Service.
In its submission, Aifa questions whether the evidence used to demonstrate MAS’s effectiveness is appropriate.
Last month, the TSC announced it would look into the salaries paid to MAS staff and the effectiveness of its service. MAS chief executive Tony Hobman’s £350,000 salary package has previously been criticised by the business innovation and skills select committee who called on the Government to raise the issue with the FSA as a matter of urgency.
Aifa policy director Chris Hannant says: “We have yet to see evidence that MAS is meeting its objectives, and we are unconvinced that a predominantly online service will achieve the necessary behaviour change in the public’s approach to personal finance.
“We do not think the funding model for MAS is appropriate. They have a blank cheque from the financial services sector without any accountability to it. We also need to see evidence that demonstrates the service’s value. For this we need to assess MAS’s effectiveness against indicators such as the narrowing of the savings, pension and protection gaps.”
Aifa also argues that MAS should provide information but not regulated advice.
Hannant says: “We thoroughly endorse MAS’ current role in signposting consumers to regulated financial advice. But it is important that MAS remains a source of information only and does not creep into the regulated advice sector.”
The MAS, which was formerly the Consumer Financial Education Body, launched in April 2011 and is funded by a statutory industry levy.
As well as providing generic financial advice, the MAS was this year given responsibility for the co-ordination of debt advice. Its budget for 2012/13 doubled from £44m in 2011/ 12 to £87m, to take account of its new remit.