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George Mudie MP: The Money Advice Service ‘confirms your worst fears of Government’

George Mudie MP, the man behind yesterday’s damning report into the Money Advice Service, says he is “amazed” at the amount of money the service is spending and says it seems “hell-bent” on doing things its own way.

But he says it would be “premature” to scrap the MAS now ahead of a Treasury review into the service’s objectives.

The Treasury select sub-committee yesterday published its report into the MAS which stopped short of insisting the body was scrapped altogether.

The report, which was 18 months in the making, granted MAS a “stay of execution” but warned it is “not fit for purpose” and needs a “radical overhaul” alongside an independent report into its effectiveness before next summer.

The committee fears a Treasury report could be a done deal and wants it to be independent of both the FCA and Government.

The National Audit Office is also set to publish its report into the value for money the service delivers tomorrow as it comes under pressure from a number of sources.

MPs blasted the lack of MAS accountability to the FCA, its marketing spend, business strategy and high levels of executive pay.

Speaking to Money Marketing, Treasury select sub-committee chair George Mudie says: “I am personally amazed. It confirms your worst fears of Government that £80m a year can be spent in such an off-hand way. Nobody in Government seems to be interested in it.”

Mudie said the committee thought it would be “premature” to scrap MAS now and it is sensible to allow an independent review as long as it happens quickly.

He says: “The longer it goes on, the more MAS digs in, makes friends and it becomes more difficult for the Government to take a hard line. 

“The MAS came before us and we took a long time to make our report when we saw the old and new chief executive. There is general dissatisfaction in the committee about the manner in which they are behaving.”

The MAS is funded by a statutory industry levy and has a budget of £78.3m for 2013/14, of which £43.8m will be spent on money advice and £34.5m will be spent on debt advice.

Mudie hit out at MAS for trying to be a “big player” in providing money advice when its role should be to fill gaps in financial support and help charities such as Citizens Advice.

The clearest example is in the marketing spend and television advertising campaigns. It came under fierce attack during the evidence sessions and MPs concluded this was “misguided”.

MAS also came under heavy criticism over its high executive pay. Former chief executive Tony Hobman was paid £350,000 a year but his successor Caroline Rookes saw the pay drop to £140,000.

MAS strategy and innovation director Mark Fiander, and marketing and service delivery director Karen Broughton, are both on a base salary of £160,000.

Mudie says: “MAS has pulled the chief executives’ pay down but it is still too high. It is on par with the Prime Minister and we do not think the roles are equal. She has a tiny number of staff to have a salary so high.

“There are also two executives who have larger salaries than she has because the old chief executive had such a generous salary. It has got to be realistic. It is money paid form people who are earning a living and there has to be better care over how it is spent.”

MAS says it will work on the recommendations of MPs and the NAO but said yesterday’s inquiry was more than a year old and it had made changes already.

But Mudie says: “If they are confident of their position then they can explain it to whoever is doing the review. Both the old chief executive or chairman and the new regime seem to be hell bent on going their way and not listening to their fellow colleagues who are in the business anyway and who have been working under real pressure in the last few years.

”Nor has it listened to the views we have brought forward in committee. It has been ‘we are doing it this way so tough’.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. I am a died in the wool Tory from the South East but if I lived in Leeds Mr Mudie would almost certainly get my vote. He sure as hell talks a lot of sense here.

  2. ‘….confirms your worst fears of Government’

    Mr Mudie is one of the honorable exceptions in Westminster, but it would seem that he too is out of touch. The MAS is but a tiny pinprick in the overall current disaffection of all things from Westminster.

    The list is too long to enumerate, but with not too much effort I think Mr Mudie and his colleagues might be able to compile an inventory.

  3. How much is Mudie’s salary worth? Including the value of his index-linked pension for life, natch.

    Amoebas swarming over tapeworms.

  4. Given that it’s an offshoot of the FSA, is it at all surprising that the MAS is:-

    1. “hell-bent” on doing things its own way,

    2. spending money in an offhand way and

    3. not listening to its fellow colleagues (i.e. those of us forced to fund it) who are in the business anyway and who have been working under real pressure in the last few years?

    And what still irks me most of all is the £54.5m of our money that the MAS, without so much as a by-your-leave, spends on debt counselling. Our primary function is to advise people on how best to build and to protect against loss of financial security. Why should we be forced to pay for an expensive, unelected and unaccountable body to provide guidance to people on how to climb out of elephant traps into which they’ve fallen as a result of their own lack of financial savvy and not having sought out professional advice?

    For a start, the government ought to enact legislative measures to prevent people from taking on more debt, particularly unsecured debt, than they can reasonably manage. Unsecured debt, from all sources in aggregate, should, for example be capped at 3m nett income, with stiff penalties for lenders who allow this threshold to be breached. Purchases on credit should be limited to a maximum of 80% ~ if you can’t put down at least 20%, then sorry, you can’t have it.

    It’s no good for the government to wring its hands about excessive levels of personal debt without actually putting in place any measures to tackle the problem ~ is it? By the time the MAS or the CAB get involved, the damage has already been done and they’re trying to help people to find their way out of a mess that legislation could well have prevented them from getting into in the first place. It seems so obvious and a so much better alternative to the creation of yet another expensive quango funded by those who aren’t responsible for many of the problems that they’re charged with addressing. We don’t need another privately funded government body trying to play catch-up after the event. An Independent Regulatory Oversight Committee would surely have prevented such situations arising or impose measures to rectify them. Given that George Mudie and his colleagues on the TSC have no real power to effect change or to head off follies such as the MAS, he and they must surely know this.

    And, yet again, we come back to the Statutory Code of Practice for Regulators, the foreword to which states:-

    The Regulators’ Compliance Code is a central part of the Government’s better regulation agenda. Its aim is to embed a risk-based, proportionate and targeted approach to regulatory inspection and enforcement among the regulators it applies to.

    Our expectation is that as regulators integrate the Code’s standards into their regulatory culture and processes, they will become more efficient and effective in their work. They will be able to use their resources (i.e. OPM) in a way that gets the most value out of the effort that they make, whilst delivering significant benefits to low risk and compliant businesses through better focussed inspection activity, increased use of advice for businesses, and lower compliance costs (i.e. regulatory levies, such as those to support the MAS).

    The wrong-headedness and profligacy of the MAS, its lack of real accountability (for its agenda), the need for legislation to curb irresponsible unsecured borrowing, the need for an Independent Regulatory Oversight Committee as an offshoot of the largely impotent TSC and adherence to the Statutory Code of Practice For Regulators ~ all these issues are connected but, as we see so often, nobody’s joining up the dots.

    P.S. Simon Webster ~ when did you die in the wool? Don’t you mean dyed in the wool?

  5. All bureaucrats love a review.

    Generally it means that some regulatory failure or nonentity is handed a nice position chairing a steering group or sub-committee.

    This process is then dragged on for months with copious meetings, all of which generally entail a lavish meal or several, followed by a report that states the bleedin’ obvious.

    The Strictly Come Regulation panel as accorded four zero’s to MAS – time to leave the building.

  6. For god’s sake lets get all these useless quangos (and I include regulators in that) OUT OF THE WAY once and for all.

    When they GET OUT OF THE WAY things/markets can move forward (as markets generally do) but until they do !!!!!!!!!!!!!!!

    Total and utter complete waste of time and money that just GET IN THE WAY !!!!!!!

  7. Ah Julian but now I just want to die! 😉

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