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FCA wants ‘value for money’ study on Money Advice Service

John Griffith-Jones
John Griffith-Jones

The Financial Conduct Authority wants the Money Advice Service to undergo a value for money study for its annual business plan, above and beyond the current FSA review.

Speaking to the Treasury select committee this week, FCA chairman John Griffith-Jones said it is having “robust” discussions with MAS over its budget for 2013/14.

He said: “We are, frankly, having a robust exchange of views about what they want to spend the money on, whether it is the right things.

“What we really need, and which we have the powers for, is a value for money study. It is one thing for us to review the business plan but if I do not like it and the chairman of MAS does like it then it rests uncomfortably in no mans’ land.

“I am fully aware about many people asking why MAS spends so much on its marketing budget.”

The MAS has been blasted for a “colossal” marketing spend and excessive pay for its senior staff.

When asked if the FCA has any powers to change or veto the MAS business plan if it is not satisfactory, Griffith-Jones said his powers are not clear.

The FSA minutes from its annual meeting in April, published last month, show there was board level concern over MAS’ business plan last year.

Informed Choice managing director Martin Bamford says: “We are fearful that the FCA does not really have the mandate to do anything about this. It is quite unlikely that any organisation like the MAS would ever see its budget reduced. Even if its budget is maintained however, at least it can be spent on worthwhile causes rather than vanity advertising.”

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  1. So just what is likely to be the point of such a study when the very person calling for it has no idea what, if anything, his powers might be in terms of any action being taken on the findings of the study?

    For all the good it’s likely to achieve, we might as well call for the FCA to be subjected a similar study. If the committee responsible for commissioning the study has no powers to impose and enforce any changes, what’s the point? It’d be nothing more than a bit of flag-waving.

    Conclusion of the study: The FCA’s annual operating budget of £578.4m is wildly excessive.

    Response from the FCA: That’s what we need to be an effective regulator.

    Committee: Our study has highlighted a number of areas in which significant economies could be made without compromising the effectiveness, for example relocating 80% of your staff outside E14. We estimate that alone could halve your present office accommodation costs of £68.5m.

    Response from the FCA: We consider it important that a national regulator is seen to be located at the heart of the UK’s financial system. And clearly we have much more valuable work to do.

    Committee: But you don’t need all 4,000 of your staff based in one of the most expensive office locations in the entire country.

    Response from the FCA: We think we do. After all, we must protect consumers (that tattered old flag) and that can’t be done on the cheap.

    Committee: Nobody’s saying it can be, but the point at issue here is that our study indicates it could be done without costing a king’s ransom and that if the FCA were to observe the requirements of the Statutory Code of Practice For Regulators, we would expect to see significant savings.

    FCA: Yeah, yeah, we’ll think about it and get back to you.

    And so it will go on, ad infinitum, with nothing actually changing because the regulator is accountable to no one. It’s just money and time and resources and unenforceable recommendations which the regulator can choose completely to ignore. As it almost certainly would.

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