Mas urged to work closer with IFAs as FCA squeezes budget

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Mas urged to work closer with IFAs as FCA squeezes budget

The Money Advice Service needs to work more closely with advisers, according to intermediaries, after its latest budget agreement with the FCA was revealed.

The regulator’s board minutes from 24 March, which were published earlier this month, noted that the FCA had agreed a revised budget of £81.1m for the 2015/2016

period – the same as the previous year.

The FCA approved the use of £2.2m reserves for clients affected by changes to the debt management market if more than 66,000 clients were affected, and suggested that any unused funds from the £3.8m set aside for this could be returned to levy payers.

However, the minutes show that the FCA board said Mas could not make further requests for funds relating to these debt management changes, stating: “The FCA would not be open to the Mas returning for additional funds”.

The organisation has received criticism from different parts of the financial services industry in recent months.

Former chairman and chief executive of the Consumer Focus Board Christine Farnish, in her 88-page review of Mas, published in March, called for the organisation to work more closely with the FCA – for example by providing input on the regulator’s policy development with regard to retail markets.

She also said that the two organisations should better align their views on consumer detriment and market segmentation, suggesting that the budget for Mas’s consumer finance education remit could halve from £43m while serving consumer needs more closely, and called for steps to be taken to make Mas more accountable.

In its 60-page 2015/2016 business plan, Mas said it would consider the changes to its operating model proposed in the Farnish review and report its findings to the Treasury in the autumn.

In the same business plan, Mas claimed that in 2014/2015, it had been contacted 21 million times by customers, signifying a 20 per cent increase from the previous year.

Mas claimed it had helped customers to take action 9.2 million times – more than double its target of 4.5m.

Donna Hopton, director of Kent-based mortgage broker network Cherry, said that while Mas had achieved some positive outcomes, it was important for the organisation to work with the adviser community and take it up on offers of help.

She said: “We chose to collaborate with them as we felt strongly that their budget should, in some part, be used to fund the otherwise unaffordable matter of an advertising campaign to ensure consumers are aware of the value of independent advice.

“We also offered them our software and any co-operation we could possibly provide to ensure that as far as possible, good things emerged from their existence – for consumers and also for advisers who we believe offer the very best solution for consumers.”

Ms Hopton added: “We believe that Mas has some excellent people with laudable intentions, but it is essential that they work closely with the army of advisers who already exist, and do what they do very well indeed.”

Right to reply

Mas chief executive Caroline Rookes said: “Consumers are at the heart of everything we do and we help thousands of people each day through the money advice we provide and the debt advice we fund.

“We have listened to the industry in setting our business plan and budget for this year. The budget for our money advice work is 20 per cent lower this year than in 2014/15, with the budget for marketing one third down. The remainder of our budget is for our debt advice work. Most of this goes straight to fund free debt advice across the UK, and advisers do not contribute towards this.

“It’s vital that people get help tailored to their needs, and that means for many people, seeing a regulated adviser. We recently launched a new directory of advisers specialising in retirement to help people find an adviser who can help them navigate the new pension freedoms. And we’ll continue to work closely with the advice community to help as many consumers as possible.”

Adviser view

Chris Hannant, director general of Apfa, said: “I think Mas recognises it can do more and has been trying to do so.

“Pension Wise is using it to direct people to financial advisers but the website could explain the merits around advice a bit more.”