The Money Advice Service is to take over responsibility for the co-ordination of debt advice in a move that could see industry levies rise by as much as 61 per cent.
The MAS has been asked to research and develop a delivery model for debt advice. Industry and debt advisers are due to be consulted on the move, which is set to happen in April 2012.
At an evidence session before the joint committee on the draft Financial Services Bill last week, MAS chief executive Tony Hobman said the current budget is £43.7m but other possible costs are “on the horizon”.
He said: “The Government has asked that we take over co-ordination of debt advice. Currently, the face-to-face contracts run by the Department for Business, Innovation and Skills, through Citizens Advice, are in the order of £27m.”
MAS is fully funded through a levy on the financial services sector. Hobman indicated that cost savings could be made when MAS takes on the new remit in April 2012.
Hobman told the committee: “I think we can get a lot more bang for our buck by being smarter about how we do things.” He said around 10 per cent of people have heard of the MAS but he wants to see 10 million people using the service a year.
He said the success of the service will be measured against a target of 500,000 people carrying out its financial healthchecks and 8 per cent of people taking action as a result of using the service.
Clayden Associates chartered financial planner Daniel Clayden says: “If the industry has to pay the bill for helping people with debt, lenders should be made to pay for it rather than advisers.”