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’.”