Let’s not terminate the Money Advice Service yet

This most essential of tasks now falls to the Pensions Advisory Service and Citizens Advice, which will, respectively, provide the telephone and face-to-face aspects of the guidance guarantee.

This comes hot on the heels of MAS chief executive Caroline Rookes making some unfortunate, ‘tarring with the same brush’ comments about advisers and the retirement income reforms, leading to a somewhat botched apology. This will have stoked the ire of investment advisers, and rightly so. After all, they partially fund the service.

Damning MAS to oblivion in just one election cycle, despite an admittedly terrible start, may not be the answer.

We also know that the Treasury select committee came close to recommending the MAS’s abolition.

One may now legitimately ask, if MAS cannot deliver retirement guidance – something so fundamental to the retirement reforms – then what can it deliver? Should we conclude that abolition is a no-brainer?

One reason not to axe the service is the advice gap. The RDR has increased the gap. The withdrawal of banks from retail financial services advice has likewise cut access, though proper investment advisers would question the quality of such advisers.

Even auto-enrolment, while extending pension coverage, may well have cut down on the amount of information and advice that scheme members receive – a combination of the impact of the RDR again and other edicts about commission and charging from the pensions minister.

It is possible that some telephone services and execution-only brokers are filling a portion of the gap.

Many investment managers and pension and investment platforms now offer useful information through blogs and websites, which may add to the sum total of investment knowledge. But while individual businesses and customers may benefit, does this stack up on a broader national scale?

Damning MAS to oblivion in just one election cycle, despite an admittedly terrible start, may not be the answer. At any rate, not just yet.

Before such a decision is taken, it might be better to consider just who is being reached with what information and what impact it is having.

The idea – from a policymaker’s point of view and indeed an adviser’s – is to help people become less indebted and better insured; to help them save more and, crucially, invest more when they are in a financial position to do so.

The challenges are different for different age and income groups. But they are all pertinent in trying to build what one might call a more financially resilient society.

In broad policy terms, it means ensuring we don’t lose any more investment advisers and finding ways to build up their numbers through smarter, more focused regulation. This may involve clarifying simplified and focused advice.

As for the MAS, while its funding model and indeed its ‘internal’ attitude to advisers may need a shake-up, it should properly be retained, certainly until other reforms are seen through.

To do otherwise may simply make the consumer advice and information gap even more difficult to bridge.

John Lappin blogs about industry issues at www.themoneydebate.co.uk