The Money Advice Service is to take over responsibility for the coordination of debt advice in a move which could see the industry levies funding the service rise by 61 per cent.
Speaking at an evidence session before the joint committee on the draft Financial Services Bill this morning, MAS chief executive Tony Hobman said MAS’s current budget is £43.7m but that other possible costs are “on the horizon”.
He said: “The Government has asked that we take over coordination of debt advice. Currently the face to face contracts that are run by the Department for Business, Innovation and Skills, through Citizens Advice are in the order of £27m.”
Under the Financial Services and Market Act 2000, MAS is fully funded through an industry levy. An MAS spokeswoman says decisions have not yet been taken over how the new role will be funded. This could also include a levy by the Office of Fair Trading on consumer credit licensees or by a transfer of the BIS budget. Funding the new role by redirecting the BIS budget would require a change in legislation.
Hobman told the committee: “I think we can get a lot more bang for our buck by being smarter about how we do things.”
MAS has also been asked to research and develop a delivery model for debt advice. It will take responsibility for the new role from April 2012.
The move was first announced by BIS in July after a consultation into debt advice and personal insolvency. But Hobman told the committee he would like there to be a further consultation focused exclusively on the new role going to MAS.