The Money Advice Service does not offer advice nor is it free, points that have been well made by other columnists and Money Marketing editor Paul McMillan.
The idea of a generic financial advice service, pioneered by Otto Thoresen, is a good one. Generic advice is not regulated, so it can be provided on a free or a paid basis. But Thoresen’s idea was based on face-to-face advice, and therefore fitted the dictionary definition – human judgement is involved. By contrast, the Money Advice Service is primarily an information resource with a few flowcharts and decision trees.
To call this advice is, in my view, seriously misleading. As other columnists have pointed out, it devalues advice and confuses people. To call it free is even worse since it is no more free than the protection provided by the police. It is funded by a levy, which I pay whether I like it or not.
But I want to focus on what I think is an even more damaging aspect of MAS – the description of the information it provides as education. Since its remit is consumer education (that is the statutory responsibility of the FSA under which MAS is funded), it has to describe the provision of information as education. Yet as everyone knows there is a profound difference and conflating the two does a major disservice to consumers.
Let’s not be too impressed by the assembly by MAS of lots of information in one place – information and tools that in many respects are not as good or useful as those provided by the likes of Martin Lewis, Motley Fool, MSN Money, the BBC or others too numerous to mention.
This is the opposite of the top-down attitude of MAS – it is child and teacher-focused, engages children and gives them real understanding. This is genuine money education
Now let me remind you what education is really about. It is not about entering numbers in boxes and accepting the result of a calculation you do not understand. It is about learning and understanding principles so that you can apply them for yourself.
Step forward the unsung heroes of the Personal Finance Education Group, who for the past 10 years, as a charity and on a shoestring, have been educating children in primary and secondary schools in all aspects of money.
PFEG was given an award as the Training and Education Charity of the Year 2010. Look at its website and you will understand why. This is the opposite of the top-down attitude of MAS – it is child and teacher-focused, engages children and gives them real understanding (the 2010 annual report gives splendid examples). This is genuine money education. It will take years to produce results. MAS is window-dressing by a failed regulator that knew it could win some quick easy plaudits by spending a lot of other people’s money on shiny stuff.
PFEG’s budget in 2010 was £6m, most provided by sponsors including Barclays, HSBC, the Association of Investment Trust Companies, the Investment Management Association, Prudential, Aegon, the Association of British Insurers and the Institute of Chartered Accountants in England and Wales. PFEG has had to convince these sponsors to stump up the money and has got incredible value for it, thanks to its pro bono volunteers.
Now watch as the MAS apparatchiks (2011-12 budget – £44m) try to assimilate PFEG to its empire. If I were a PFEG sponsor, I would fight that tooth and nail. Real education is undertaken by enthusiasts, not bureaucrats.
Chris Gilchrist is director of Churchill Investments and editor of The IRS Report