The introduction of an at-retirement guidance service could see the Money Advice Service’s advertising budget fall, says the chair of the FCA’s Consumer Panel.
The Government is consulting on proposals to introduce a guidance service for all defined contribution pension scheme members from next April, after Chancellor George Osborne announced in last month’s Budget that all DC members will be offered “free, impartial, face-to-face advice” at retirement.
A Treasury spokesman says the Government has asked the FCA to develop a set of standards for the guidance, working closely with MAS, the Pensions Regulator and the Pensions Advisory Service.
Speaking to Money Marketing, Consumer Panel chair Sue Lewis says if MAS was to provide the service, it could reduce its advertising budget because it would have “an automatic recruiting place” for consumers.
She says: “It is a bit like financial education in schools – the guidance service would be an automatic recruiting place for MAS.
“One of the things you want kids to learn about in school is where do I go to for help, and similarly if 400,000 people are picking up the phone to MAS or going to face to face sessions, then that spreads the word.
“The way to get customers through the door is to provide a good product and get people to tell their friends, rather than spend millions on advertising. Unless people are telling their friends or talking about it on social media, advertising is a waste of money.”
In its budget for 2014/15, published this week, MAS confirmed it will spend £14.1m of its £43m budget for money advice on marketing and communications.
MAS chief executive Caroline Rookes says it is too early to say whether the guidance service would impact MAS’s budget.
In December a report by the National Audit Office said while the debt advice part of MAS is delivering value for money, the money advice part is not.
Lewis says: “I think the accusations against MAS are fair, but I do think they are changing and starting to up their game.
“The at-retirement guidance service is exactly what the MAS was set up to do.”