The Treasury sub-committee’s inquiry into the Money Advice Service will investigate the salaries paid to its staff, how effective the service is and how appropriate it is that it is funded by the financial services industry.
The inquiry’s terms of reference, published today, say it will look at how effective the MAS’s expenditure on staff and other resources is, whether it is meeting its statutory objectives of enhancing the understanding and knowledge of members of the public of financial matters and the public’s ability to manage their own financial affairs as well as whether these are the right objectives for it to have.
It will also consider whether the service is suitably accountable and how its effectiveness can be assessed.
MAS chief executive Tony Hobman’s (pictured) £350,000 salary package has previously been criticised by the business innovation and skills select committee who called on the Government to raise the issue with the FSA as a matter of urgency. The committee said Hobman’s remuneration could be seen as “extravagant” adding it “does not sit easily” in an organisation tasked with helping those in debt.
Last September, the Advertising Standards Authority rejected adviser complaints over the MAS’s controversial TV ad which claimed it offers free, independent advice which was a “breath of fresh air”. In February, the FSA confirmed the MAS budget has doubled for 2012/13 to £87m.
In March, research by the MAS into its online healthchecks found that they are failing to deliver significant changes to consumer behaviour. It found that 300 out of 1,000 people surveyed could not remember taking the healthcheck with another 371 failing to do anything differently as a result.
Last month, Treasury financial secretary Mark Hoban rejected calls to amend the Financial Services Bill to force the MAS to focus on providing “targeted, proactive and easily accessible advice to those encountering economic disadvantage, financial exclusion or financial exploitation”.
The inquiry will also look at the extent to which services provided by the MAS are also provided by other organisations and how they compare. It will also ask whether the service should have a greater role in financial education in schools, something over 200 MPs, including committee member and Conservative MP Mark Garnier want to be made compulsory.
Money Marketing revealed the sub-committee was planning an inquiry into the MAS in March.