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Money Advice Service chief discusses ambitious growth targets

The Money Advice Service has set itself an ambitious target of reaching more than 11 million people a year by 2016/17, as its budget for 2012/13 doubles to £86.8m.

The MAS budget is a sensitive subject for IFAs, as it is funded by a statutory industry levy. Last week, the FSA announced the 2012/13 budget for the MAS is doubling from £43.7m in 2011/12 after the MAS agreed to take on a new responsibility for delivering debt advice.

Speaking to Money Marketing last week, MAS chief executive Tony Hobman says the MAS will effectively run two budgets. The money advice budget will rise 6 per cent to £46.3m while £40.5m will go towards debt advice.

The money advice budget will continue to be funded by all financial services firms while the debt element of the budget will be funded by banks, building societies and lenders.

Hobman says: “We are very conscious that our costs result in an industry levy. We are alive to the need to show value for that and to explain what we are doing and why.”

He says he is pushing for the service’s online healthcheck, which launched last June, to issue one million action plans next year and come into contact with 1.9 million individuals. He adds he wants the MAS to contact over 11 million individuals in the next three years.

The online healthcheck asks people a series of short questions to encourage them to think about budgeting and planning their finances. At the end of the process, consumers are given a personalised action plan which suggests the types of financial products they should consider.

Since its launch, the healthcheck has had over 400,000 visits, against a target of 500,000 visits by the end of March.
Hobman admits that the MAS currently lacks the ability to drill down into the data it holds to see what action people have taken after receiving their action plan.

The target to reach significantly more people is taking place against a backdrop of a wide-ranging review of the service, which saw half of the 150 MAS staff put on consultation in November.

Hobman says: “It is fair to say that part of our restructuring and refocusing of the service is about having much better management information so we can measure and track customer journeys. That is important to us because we need to keep our offering relevant and personalised, so we need to know what people are doing. But it is also important so we can track our own performance and communicate to the industry what volumes of business we are directing to IFAs.”

The MAS has been on the receiving end of fierce criticism from advisers over the last year, initially after its TV campaign in June which promised “free, independent and unbiased advice”, and more recently in December when it said it was moving towards offering an “advice-type” service rather than information and guidance only.

But Hobman maintains there is a clear distinction between what financial advisers do and the service MAS offers.

He says: “It is absolutely about providing generic, unregulated advice, we are not crossing that boundary. We maintain a belief that by doing what we are doing and generating much better financial awareness and capability across the UK, we are growing the market for people who are then engaged with their finances and understand there are products they do not have and even that there is specialist advice they need and do not have.

“We are very clear that what we want to do is maximise the potential of those people who should be sitting in front of an adviser and are prepared to pay a fee for that.”

Thameside Wealth director Tom Kean says: “A cynic might question whether the MAS has been created to fill the advice vacuum created by the RDR.”

Plan Money director Peter Chadborn says: “Debt advice is out of IFAs’ remit, so it is right we should not have to pay for it. I do not think the MAS is going to encroach on advisers’ territory, the service is about providing knowledge of the basics. Advisers offer a much more comprehensive financial planning service.”

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. “We are very clear that what we want to do is maximise the potential of those people who should be sitting in front of an adviser and are prepared to pay a fee for that.”
    It will only cost the advisers £46.3M!

  2. you could not make this up ? 10th February 2012 at 1:17 pm

    what a fantastic amount of money. Pay Hester his Bonus and shut this quango down…saves 85m…now there is some Money Advice for free

  3. Is Hobman related to Hoban by any chance?
    They both appear to talk the same language.Complete nonsense.

  4. Let me get this right I have to fund this service through increased FSA fees and therefore can’t use that money to invest in my own business which provides the same service to the general public.

    I don’t have a choice in paying these fees and effectively I’m paying for my own competitor to get larger and more powerful.

    Please can somebody tell me how that is FAIR?

    One last point, this service mentions that it’s giving unregulated advice but it gives guidance on Annuities ISA and other regulated products – surely that’s regulated?

    If our own regulator does not know the difference between regulated and unregulated business than how the hell are they going to stop individuals from encroaching on our trade without having proper authorisation like Solicitors, Accountants and so-called power planners.

  5. Peter Herd @ 2.20

    Peter you have to appreciate that they know the difference perfectly well between regulated and unregulated. The rules apply only to you, not to bodies created by the Govt. Fairness only applies to those not on the Govt cull list. We have arrived in an Orwellian world where the strong abuse the weak and destroy you if you dare to complain. Carry on being an IFA by all means, but develop a plan B. These folks are out to get us and they look like they are doing a pretty good job to me.

  6. “We are very clear that what we want to do is maximise the potential of those people who should be sitting in front of an adviser and are prepared to pay a fee for that.”
    And just how much am I going to charge for this, now you’ve scared the pants off the customer who now won’t come to me for protection or other basic products because as soon as I walk in the room I will charge them, yeh this sort of information helps everyone.

  7. Anyone know what the AIFA view is on all this ? Do they have a view ? Who is going to explain to the FSA that are in danger of killing the golden goose ?

  8. Yet still no explanation has been offered as to why the MAS considers it remotely justifiable to charge the FS industry £40.5 (a year) to provide advice on debt (not a problem in any way of our making) when a whole slew of organisations offering exactly such advice FOC already have an online presence. Perhaps the undisclosed agenda is to withdraw, bit by bit, the funding from central or local government that’s presently afforded to all the currently free debt advice agencies, a sort of covert, creeping privatisation.

    And what will the MAS do if hardly any of the people who avail themselves of its services, on the basis that they’re free (and thus “a breath of fresh air”, implying directly that advice that has to be paid for is in some way tainted and thus unsavoury), take the next step of approaching an IFA in the knowledge that they’re likely to have to pay a fee for bespoke? Afer all, Mr Hobman can hardly fail to be aware that bank salespeople commonly discourage their customers from visiting an IFA on the basis that they’ll be charged a fee for advice whereas “we don’t”, the direct and deliberate implication being that advice from an IFA will cost the customer more (i.e it’s a rip-off) than if they entrust their affairs to the bank.

    Unless the MAS makes very clear to consumers that commission-based advice is NOT free and that banks commonly charge significantly more by way of commission than the great majority of IFA’s, then many will continue to be duped into believing that “advice” from banks will cost them very much less than the services of an IFA.

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