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MAS destruction: The £400m cost of failed quango

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George Osborne’s decision to close the Money Advice Service brings to an end a sorry six years during which hundreds of millions of pounds of cash has been wasted on the failed body.

The Chancellor revealed in the Budget the MAS will be axed as part of a restructure of financial guidance that will see the creation of two bodies responsible for pensions and money support, respectively.

The pensions body will combine The Pensions Advisory Service, Pension Wise and elements of the MAS in a new pension guidance service, with a key objective to make sure consumers can get all their pension questions answered in one place.

Following the closure of the MAS, the Treasury will also introduce a new money guidance body, with a specific remit to identify gaps in the guidance market.

The new service will then commission providers to fill these gaps to ensure consumers can access debt advice and money guidance.

But was Osborne right to ditch the MAS just as it was embarking on a significant turnaround strategy? And will the hated adviser levy simply be replaced with another charge for a different guidance quango?

Lack of clarity

In the Budget consultation documents, the Treasury says it expects that by combining services it will be able to reduce the overall budget for pension guidance.

Funding arrangements will be formalised by the FCA and The Pensions Regulator.

The changes are in consultation until 8 June, with the organisations expected to be in place by April 2018.

TPAS chief executive Michelle Cracknell says it has yet to be decided who will lead the new pension guidance organisation, or whether the new body will also assume Citizens Advice’s role as a face-to-face provider of guidance.

She says: “Over the next two years the Department for Work and Pensions is going to work out the what and how, but we have a really good relationship with them and they have always made sure that we have the ability to deliver the services to meet our objectives. We are looking forward to all of this change, but there’s a big job to be done.”

Fading away

Osborne’s decision brings to an end six years of existence for the MAS, first launched in 2010 as the Consumer Financial Education Body.

Since then, it has levied a total of £397.2m on financial services firms.

Although the FCA was unable to estimate precisely how much of this sum has been paid by financial advisers, almost 10 per cent, or £32.3m, has been contributed by firms with advice permissions.

Over that time, it has been beset with controversy and has seen its remit steadily decline since October 2014, when the Treasury decided the MAS’ role in Pension Wise would be limited to providing expertise behind the scenes.

And then, almost exactly a year ago, an independent review led by Christine Farnish called for a dramatic overhaul of the business, with its budget slashed and its offerings refocused on debt support.

Farnish says: “The plan outlined in the Budget will allow for a more effective service to be provided to consumers at a much lower cost instead of this more fragmented landscape, particularly for consumers coming towards retirement, for whom it can be especially confusing.”

Thoreson Review

The MAS was launched in the aftermath of a report led by Otto Thoresen, now chairman of Nest.

Thoresen says his initial vision centred on a guidance service that also worked as a co-ordinator with other organisations.

He says: “The concept was always about gap filling – the construct discussed today sounds like that. But once the MAS was set up it had a broader remit.”

Financial Inclusion Centre director and former FCA board member Mick McAteer adds: “It was badly conceived with far too much emphasis on financial education and that was always going to be a waste of time.

“We know that passive education efforts like producing information on pamphlets and poster – and even to an extent websites – just don’t work.”

Fairer Finance founder James Daley agrees: “I don’t think it was ever quite put together in the right way. Setting up something that relies on people coming to approach it was never going to work.

“We have quite a head in the sand approach to money and if you are going to improve financial capability you have to grab consumers, and force them to pay attention.

“But they never really got to grips with the problem, and now the MAS dies having failed to address the main challenge that it was created to deal with.”

Dawn of justice

The MAS’ short history has been littered with problems, from using the word ‘advice’ in the name – a term the Treasury now admits was “misleading” – to chief executive Caroline Rookes’ questioning the ethics of advisers at a Labour party conference.

The organisation also found itself in hot water with advisers when its TV advertising campaign claimed the MAS offered free, unbiased, independent advice.

Informed Choice managing director Martin Bamford says: “This has been a long time coming and if you waste other people’s money for so many years, you get shut down. This is a great day for justice.

“My major issue has always been that spending has always been primarily focused on the wrong things, like vanity advertising. It should have been used to help the vulnerable but it was squandered on trying to help build a brand.

“The MAS was empire building rather than helping the people who need it most.”

Page Russell director Tim Page adds: “Our firms have not received one iota of benefit from the MAS. And I don’t think the MAS has helped the general public either – you get a general feeling that those who have used MAS say ‘oh is that it?’

“The problem is it does not tell people what to do or help them to transact, so they are stuck between a rock and a hard place. The industry didn’t want to pay for it and people using it have unrealistic expectations. The kindest thing to do is the kill it and hand the money back to advisers.”

And Apfa director general Chris Hannant says the trade body has “never seen the need for MAS and TPAS and Pension Wise to be doing the same thing in the same area.”

He adds: “What we need in this area is simplification and clarification. We have always said we don’t want to see MAS duplicating what is already available elsewhere, and to that extent, this seems like a logical step towards that.”

Final destination

Nonetheless, some have questioned the timing of the decision, with Rookes still in the process of reforming the organisation in the aftermath of the Farnish report.

Conservative MP and Treasury Committee member Mark Garnier says: “Had this happened three ago after the Committee’s report then I probably would have thought it was fair enough, and certainly the previous chairman and chief executive did not have the confidence of the committee.

“But under Caroline Rookes they had started to move into some interesting areas, and started to find some reasons to stay alive.

“After that there was always going to be a question about whether it should be anything more than a finger pointing people in the direction of other services.”

Moneysavingexpert founder Martin Lewis, who once described the MAS as “crap” during a TSC hearing, adds: “I would have previously said I wouldn’t blink if given the chance to get rid of MAS, but if I were in charge now I would give it 18 months because it is finally pointing in the right direction.”

And the man who first recommended its creation says the MAS would likely have ended up in a similar format to that proposed by the Chancellor this week.

Since completing his report in 2008, Thoresen says there has been a “revolution” in the amount of information available online, while additional bodies have also been created to help steer customers through the pension freedoms agenda.

Faced with such change, MAS was always going to have to evolve from its original form, he says.

“There have been a lot of changes but the work that’s been done to change the MAS over the last few years has been positive.

“These recommendations are an evolution MAS would have got to over time. All the analysis suggests even before freedom and choice reforms the need for helping people was still there.”

Expert view

If I were going to scrap the Money Advice Service, the time to do it was three years ago. We have finally got to a position where we know what the MAS should be, and at last it was moving in the right direction.

What the MAS has done in the past has been awful. It spent years being a brand-building, rent seeking exercise, duplicating services already in existence.

For the adviser community there is no doubt there has been an abominable and disgusting waste of their money that has been spent on this.

And when I spoke to the Treasury select committee in 2012, I said it was crap, and I would be embarrassed to have it on my website.

But what it is doing now is looking at gap provision, and that is finally the right direction for an organisation that is moving forward.

If you had asked the people paying for it if they would support an organisation set up to help with education and support financial capability, there would have been a lot less complaints about it in the first place.

I still do not think the MAS moved quickly enough to turn things around, and things like the adverts and sponsored tweets should have been curtailed immediately.

But we need some of that financial capability support, and this plan was moving the MAS towards that.

I would have previously said I would not blink if given the chance to get rid of MAS, but if I were in charge now I would give it 18 months because it is finally pointing in the right direction.

Now we need to ask who is going to take up the mantle of financial capability and I am not quite sure who that is.

Martin Lewis is founder of Moneysavingexpert

Adviser view

Tom Kean, director, Thameside Financial Planning

Ding dong the witch is dead. This was a dreadful incarnation of trying to help people. It was flawed from outset, including the name, was run by lesser civil servants and was paid for by the wrong people.

It was the classic case of spending other people’s money on something nobody actually wanted. A laudable idea but completely flawed.

Alan Lakey, partner, Highclere Financial Services partner

I am glad the MAS is gone. It has been an enormously expensive quango, but I do not believe I have ever heard anybody say anything good about it. It has been a total waste of the industry’s money.

My only fear is that there will be a new similarly flawed initiative further down the line that is also funded by the industry.


2008 – Former ABI director general Otto Thoresen publishes his report into public financial guidance, and recommends regulated firms contribute towards the cost of a money guidance service

April 2010 – Consumer Financial Education Body is established by the Financial Services Act

April 2011 – Organisation rebrands and the Money Advice Service is launched

June 2011 – MAS slammed over TV ad with the strapline – “our advice is independent and unbiased. Oh, and it is free. How is that for a breath of fresh air?”

June 2014 – Treasury announces Christine Farnish will lead a review of MAS

September 2014 – At the Labour party conference MAS chief executive Caroline Rookes said she was “personally” worried about the ethics of regulated advisers

December 2014 – Farnish review recommends halving MAS headcount and cutting budget by up to 38 per cent

April 2015 – MAS drops TV adverts as marketing budget slashed

April 2015 – Pension Wise launched

March 2016 – Osborne announces MAS will be scrapped



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There are 10 comments at the moment, we would love to hear your opinion too.

  1. The FCA should apologise. The Government agrees that Advice in this context was inappropriate. In other words, not fair and misleading. Where was the FSA? Where was our independent regulator – did it not have the balls to confront the Treasury?
    We knew it was wrong and unclear and this is not hindsight.

  2. The problem with all these theory led quangos (the FCA is just another bigger incarnation as are the energy/telecom/water/utility et al quangos) is that they NEVER actually work but perhaps more importantly nobody pays any price for their failure.

    If they ALL burnt down tomorrow nobody in the real world would actually notice much less be affected either in the way they worked, how they acted or affect their lives in pretty much any way !

    Lot of people out of NON jobs though !

  3. The MAS is a classic example of the government refusing to listen to suggestions from the adviser community, most notably that a voucher system would be the most cost-effective way of encouraging consumers to talk to people both qualified and authorised to provide them with advice. Consider:-

    1. Such a system would have cost relatively little money to set up and publicise.

    2. Apart from the relatively small fixed overhead of an administering body (how many staff would be required? 20 perhaps?), its ongoing costs would be directly proportionate to the number of consumers who choose to use it. If it failed to take off, it could be wound down for a fraction of the likely cost of winding down the MAS.

    3. What if any research was undertaken to determine consumer appetite for telephone consultations in preference to being able to talk face to face with somebody local who could cast an eye over their paperwork?

    4. What (evidently not so) bright spark chose the name Money Advice Service for an organisation unable to provide advice? How can it be anything other than inevitable that consumers’ expectations of what the MAS might be able to do for them are entirely misplaced?

    The MAS has been a hugely wasteful triumph of theory over practicality.

  4. Just over £7k per person the site “helped”. If only I were paid that every time I gave away an hour meeting at my expense to a referral!

  5. They are closing it and effectively doing a phoenix.

    They cannot change the names of these bodies by law, so this clearly is their solutions.

    If you thing the industry is going to pay less as a result of this so called closure think again!

  6. Of course it will be replaced Martin – the whole sorry quango thing is the perfect job creation program !

    You’re absolutely right It wont cost less it will cost much more – the theorists will state ‘the quango isn’t working so whats needed is more and much more expensive bigger quango’ when ACTUALLY everybody who ACTUALLY knows, knows the complete reverse is true !!!!

    Its the perfect ponzi scheme paid with other people’s money which fails and attaches no blame to the architects – what a scheme !!

  7. One down .. two to go

  8. An apology wouldn’t go amiss would it! What a waste of time and money – which we told them in the first place. I live in hope that the government will take their heads out of their armpits and listen to the industry now.

  9. The day the Govt, Treasury or a single individual at any of the discredited F-pack apologies I will retire.

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