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Money Advice Service to be scrapped

Rookes-Caroline-MAS-2013-500x320.jpg

Chancellor George Osborne will announce the closure of the Money Advice Service later today as part of the Budget.

Osborne’s decision comes as part of the review of Government-backed guidance services, launched alongside the Financial Advice Market Review last year.

The service is set to be replaced by a much smaller body with a focus on providing “frontline” services to those in financial difficulty.

While the guidance review was explicitly designed to cut down on duplication between services, the final FAMR report, published this week, called on the FCA to provide more support to firms who wish to offer their own guidance and information to customers, without crossing over into full advice.

A Treasury spokesman declined to comment on how the decision will affect other Government-backed services currently being offered by Citizens Advice and The Pensions Advisory Service.

TPAS and Citizens Advice are responsible for the phone-based and face-to-face elements of the Government’s Pension Wise guidance service, with the MAS providing additional online information.

The move comes almost exactly a year after an independent review of the MAS recommended that its budget be dramatically slashed, with the service refocused on primarily offering debt advice.

Since then, MAS chief executive Caroline Rookes has been working to redraw the organisation, unveiling plans in December to cut MAS’ total budget by £6m for 2016/17, from £81.1m to £75.1m.

The plan called for the ‘money guidance’ budget to be reduced by £4m, from £34.1m to £30.1m, while the debt advice budget would fall by £2m, from £47m to £45m.

The biggest planned spending reduction came through marketing, which was due to be slashed by 55 per cent from £8.8m to £4m, with the planned expenditure representing the second year in a row the MAS’ marketing spend has been drastically slashed.

The MAS has faced fierce criticism for its spending in the past – former chief executive Tony Hobman was forced to resign in 2012 after his FSA chairman Lord Turner admitted Hobman’s £350,000 salary was “rather too high”.

Hobman’s exit led the MAS to conduct a review of the chief executive’s remuneration, with Rookes subsequently appointed on a salary more than £200,000 lower than that of her predecessor.

Since then directors earning upwards of £200,000 have also departed.

And Rookes told Money Marketing as recently as January that over 54,800 consumers had used the organisation’s retirement adviser directory since it launched in April.

Of that group over 20,500 users, or 37 per cent, went on to contact an adviser as a result, she added.

A MAS spokeswoman says: “We will work with the government to fully consider the implications of any announcement. In the meantime we will continue to fulfil our statutory role to help people make the most of their money.”

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Comments

There are 18 comments at the moment, we would love to hear your opinion too.

  1. The MAS is the Financial Services equivalent of a camel designed by a Committee, but intended to replicate the best features of a horse.

  2. Happy ! Last on out switch off the lights please !

  3. One gravy train to have at last hit the buffers.

  4. Not for the first time when commenting on this woefully over regulated directionless industry, I am lost for words (at least words I could use on a public forum)

    Still at least it wasn’t their money eh !

  5. One useless quango gone – only three to go

  6. Thanks for finally admitting this was a waste of time, can we (the IFA community) have our money back please?

    • I was just about to say that Simon. As we over charged IFA’s have been paying for the “jobs for the boys” quango we should now see a reduction in our fees!
      Ha ha I don’t think so, they will invent another useless dept to keep fees the same

  7. I fear the clue is in the line: “The service is set to be replaced by a much smaller body with a focus on providing “frontline” services to those in financial difficulty.”

    I rather suspect that we will see the taxpayer bit closed down, but the ‘much smaller body’ will be larger than anticipated and still funded by our levies.

  8. Will this include their useless and inaccurate website?

  9. PS. As this is now a defunct organisation can we expect that the gold plated pensions, any severance packages and other peripheral benefits will also face the axe?

  10. wooooooooooooo-hooooooooooooooo

  11. To quote Ian Dury, What a waste..

  12. Great news..but no doubt the FCA/Government will bring it back iunder a different name Advice Money Service …..

  13. For those experiencing financial difficulties, the CAB and many local debt counselling agencies already exist. The MAS was created (with a fundamentally misleading name) with a view to privatising those services, as demonstrated by the CAB’s regular complaints over many years about “a creeping starvation of funding” from central government.

    As for guidance on financial planning (for those with investable assets, surplus cashflow or with accumulated pension funds on which they need advice as to how best to deploy them), a voucher system was suggested by many advisers. But this was studiously ignored by the powers that be, who preferred instead to set up another hugely costly white elephant, not least due to the grossly excessive levels of pay granted to its senior managers, a serious lack of external oversight as to how it should allocate its budget (£8.8m on marketing??) and no meaningful system for monitoring the actual benefits to those who availed themselves of its service. Trumpeting a few big-sounding statistics about the number of people who’ve engaged with the MAS but with no follow up 6 or 12 months later to ascertain how many of those people actually implemented and stuck to an agreed plan of action means absolutely nothing.

    Rookes is quoted as having claimed that 54,800 consumers have used the organisation’s retirement adviser directory since it launched in April (presumably in 2015). Annualised, that works out at just over 73,000. If, say, 100,000 consumers were to take advantage of a £100 government voucher system, that’s £10m p.a. which, in the overall scheme of things, isn’t very much at all and VASTLY less than the costs of the MAS and Pension Wise. Was there no one in government or whatever body advised the government who realised this? If there were, evidently nobody listened to what they had to say. So now the MAS is to be consigned to the dustbin ~ but with what in its place?

  14. “The service is set to be replaced by a much smaller body with a focus on providing “frontline” services to those in financial difficulty.” Eh, excuse me but is that not what the CAB and other charities currently do now anyway?
    Any takers on a bet that the smaller unit will still be funded to the tune of what we currently pay towards MAS. “We should be happy as this will be a cost neutral exercise for advisers and the industry but will save the tax-payer money” could be a good catchy line for G O today.

  15. Paul Standerwick 16th March 2016 at 11:29 am

    what a terrible waste of money, this should have been done much earlier, people should be held accountable.

  16. Pensions Wise should be the next to go

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