Cash spent on soon-to-be scrapped government guidance body the Money Advice Service would have paid for more than a million and a half hours of face-to-face advice.
Weighed against the average adviser rate, the cost of Mas’s online money guidance service could have instead bought an hour of full regulated advice each for 1.6m people.
With Deloitte research from 2012 putting the size of the advice gap – those who need financial advice but can’t afford it – at 5.5m people, that would have meant 30 per cent of those in need talking to an adviser about their finances.
Launched in 2011 and binned in the March Budget in favour of a ‘slimmed down’ service, analysis by Financial Adviser showed six years of Mas’s online financial ‘advice’ – partly paid for by adviser levies – cost a total of £243.6m.
With the average adviser charging £150 an hour for face-to-face advice, according to research by Unbiased.co.uk last July, Mas’s guidance cost equates to 1.6m hours of advice.
Several industry figures, including Keith Richards, chief executive of the Personal Finance Society, have suggested an advice voucher system as an alternative to industry paid-for government initiatives such as Mas and Pension Wise.
Paying advisers would also have meant consumers would have had regulated tailored advice,.
Mr Richards said: “Advisers have an important ongoing role to play in bridging the information gap, but unless a voucher scheme is introduced it remains a less clearly defined process and will differ from firm to firm.”
Since 2011/12 Mas has generated 67m ‘contacts’ through its website, telephone, face-to-face and webchat services, but this figure includes those who have contacted the service more than once as well as those who received both debt and money advice.
Over the course of Mas’s lifetime, the annual running costs of the financial advice service ranged from £32.9m in 2010/2011 to a peak of £46.2m in 2012/2013.
When it was first established in 2010/2011, the Consumer Financial Education Body – as Mas was then known – had an initial budget of £32.9m.
Adviser view
Simon Webster, managing director of Kent-based Facts & Figures Chartered Financial Planners, said: “The Money Advice Service was a very expensive solution to a problem that didn’t exist. I am delighted it is being scrapped. The right solution is to teach money in schools properly.”
