Many years ago, back in the days when there were things called O levels, I remember one question we were asked in a history exam: “How long did it take to create the Roman Empire?”
I felt it was a daft question. Although a particular mode of society can develop gradually over an extensive period of time, empires themselves are not formed as part of a long-term process. They are declared overnight, or so I thought, generally by the person who wants to be emperor.
In fact, I was mistaken. Octavian, the heir of Julius Caesar, was granted the title of Augustus by the Roman senate in 27BC but his declaration of a successor, Tiberius, only took place in 14AD. In other words, the Roman Empire evolved into formal being over a period of several decades.
If you have managed to stay with me so far, then you have an idea of how I am starting to view the development of the Money Advice Service.
Once upon a time, a few months ago, I viewed the MAS as a Government-backed creation, vacuuming money off IFAs and the financial services industry to peddle a myth that it was offering millions of consumers something laughably called “advice”.
Back then, I thought the advice was partial, not of a very high calibre, missing out on key parts of most individuals’ financial journeys and focused on some aspects of financial products and the way they worked but not others.
I also criticised the MAS for the fact that it failed to focus on the needs of the less- well-off in society, especially those who had a need for debt counselling.
In fact, I should not have been so hasty. Under the MAS’s long-term strategy, the aim had always been to bring debt advice under its own remit.
As MAS chief executive Tony Hobman recently told Money Marketing, his organisation will actually operate two budgets – money advice, the bit I was slating, will receive £46.3m and another £40.5m will go towards debt advice.
Money for the former service will come from financial services firms while the debt part will be funded by banks, building societies and lenders.
Tony Hobman, whose remuneration package – including a pension entitlement and bonuses – tops £350,000, is responsible for the way this money is spent.
One or two financial advisers seem to feel this is rather a lot of money for the head of a government quango to be earning, especially as one or two of you have calculated that his wages cost each individual financial adviser about £10-£15 each.
In fairness, it should be pointed out that Hobman is responsible for a £95m budget and how it is spent. Except, of course, that he is not really.
A vast chunk of that money goes directly into the pockets of the increasingly controversial private business A4e, paid to provide a face-to-face money advice service to consumers.
In essence, what we have is a transfer of funds from financial advisers and the industry itself, who almost certainly levy consumers for this money, directly or indirectly, passing briefly through MAS and then into the capacious pockets of Emma Harrison’s former company, helping to pay her a nice little dividend of £8.6m last year.
Again, several points need to be made – the first is there is no suggestion all the money earned by A4E comes from providing money advice. The majority of that dosh comes from its efforts to find “work” for unemployed people.
Second, there is no suggestion of any fraud in relation to the money advice given. Third, I am not suggesting that the money advice being given is “wrong”. It does not appear to be – although I have read mystery testing which suggests it is facile and unlikely to be really effective in helping people to make sensible financial decisions.
Which is why I am not remotely surprised at the fact that while the MAS supposedly has a target to issue one million “action plans” for its online visitors next year, Hobman’s organisation is unable to “drill down” in the data to see what people are doing, if anything, to put those so-called plans into practice.
My personal guess is that none of them will be doing anything significantly different to what they would have done anyhow, even without the MAS’s intervention.
As for the debt advice side, all of us know there are a plethora of organisations providing what are in some cases excellent services to people with money problems. In the case of Scotland and Wales, the work will continue to be carried out, MAS funding, by Citizens’ Advice. In other parts of the UK, it will be A4e.
Regardless of who does it, Hobman, for the past 10 years a state-paid quango-crat, first at the Pensions Regulator and latterly at the MAS, will continue to pick up his £350k and counting as he passes Go.
How long does it take to build up a financial services empire? In Tony Hobman’s case, about 12 months.
Nic Cicutti can be contacted at firstname.lastname@example.org